Happy birthday, Papa Dow!
Charles Dow founded the Dow Jones Industrial Average 125 years ago today.
- The Dow started with 12 companies, most of which don’t exist anymore, though General Electric was in the original 12.
- It has gained 7.7% on average per year, with an 82.7% gain in 1915 as the best year ever, and a 52.7% loss in 1931, the worst year ever.
- It has made 1,440 new all-time highs, which comes out to 4.5% of all days that have scored a new high.
- The worst day ever was a 22.6% drop during the crash of 1987, while the best single day gain ever was 15.3% gain in March 1933.
Daily Insights
U.S. markets opened slightly higher in an attempt to reverse Tuesday afternoon’s pullback
- The major averages are moving together as the S&P 500 Index, Dow, the Nasdaq Composite, and even the small cap Russell 2000 index are all higher by 0.1% to 0.3% in early trading.
- The S&P 500 sits just 1% from its all-time high.
- European equities are little changed in midday trading as the Euro Stoxx 50 is off 0.1%.
- Asian equities finished mostly higher with the Hong Kong (Hang Seng) up almost 1%.
What can Phil Mickelson’s win teach us about investing?
Here are some timeless lessons from Lefty’s big win.
- Phil changed his body to remain competitive versus golfers half his age. Investors need to remember that things are always changing and if you aren’t willing to change sometimes, you could be left behind.
- Experience matters. Experienced investors know things that novice investors simply don’t. Also, you can read all the books you want about bear markets, but once you’ve been through some, that is knowledge that you can’t teach.
- Time is your friend. Historically stocks tend to go up and if you have a long enough time horizon, using time to your advantage is a great skill.
We talk more about these concepts later today on the LPL Research blog, available at 1p.m. ET.
The Fed pushes back
Multiple Federal Reserve (Fed) members pushed back on growing inflation and overheating worries.
- In what appeared to be a coordinated approach, Fed members Richard Clarida, Mary Daly, Randal Quarles, Charles Evans, and Thomas Barkin discussed the idea that the Fed is indeed talking about tapering and why the recent inflation spike should be transitory.
- This is on the heels of non-voting members Patrick Harker and Robert Kaplan expressing worries about not discussing tapering and the current level of quantitative easing.
Technical update
Stocks are reversing modest losses from Tuesday in early trading today. Gold is back above $1900/oz. for the first time since early January, and is now up 13% since the end of March, boosted by a decline in real rates since that time. Next resistance for gold comes into play at $1965/oz.
LPL Research in the Media
Chief Market Strategist Ryan Detrick spoke with the Associated Press about the tech bounce.
Equity Strategist Jeff Buchbinder spoke with Business Insider about what could happen the rest of ’21 for stocks.
Stock Market Gains Likely To Slow
LPL Research explores how, as this bull market gets a little older, the pace of stock market gains will likely slow but does not expect pullbacks to last very long. Learn more in this week’s Weekly Market Commentary.
To Taper or Not to Taper: That Is the Question
On the LPL Market Signals podcast, Chief Market Strategist Ryan Detrick and Equity Strategist Jeff Buchbinder dig into why tapering is a normal part of the recovery process and why they think the inflation threat remains transitory.
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