Psychology matters.
That’s what traders on the floor of the New York Stock Exchange say as major market indexes, like the Dow Jones Industrial Average, approach milestones.
This time it’s Dow 40,000.
Ball caps donning the mark started circulating throughout the trading floor Thursday when the blue-chip index hit the big-round number on an intraday basis.
While the Dow’s “psychologically important” level may be capturing headlines, its large-cap index peers - the S&P 500 and the Nasdaq Composite — are in record territory too.
The latest gains are fueled by better-than-expected corporate earnings, the Federal Reserve indicating it doesn’t anticipate a rate rise on the horizon, and softening economic data.
Momentum matters in the market, and surpassing key thresholds can add to positive sentiment among investors.
This milestone, other than its unique number, is no different than other big-round numbers hit by the Dow in the past.
Dow 30,000; 20,000, 15,000 and 10,000: these are all notable levels celebrated throughout the market’s history.
Dow 20,000 was a little different because it happened during the first year of the pandemic on Nov. 24, 2020, but for those of us still working from the NYSE floor during that time, it was memorable.
It preceded a run by the market to new highs in 2021, on the back of ultra-low interest rates and after a presidential election.
The Dow hitting 40,000 today will certainly bring about new, happy memories.
