Dow 40,000 how it got here

The Dow Jones Industrial Average reached a milestone on Thursday that seemed unfathomable a year ago.

The 30-stock benchmark broke above 40,000 for the first time. The move comes as investors cheer prospects that artificial intelligence will boost corporate profits and that the Federal Reserve may cut interest rates later this year as inflation continues to decline from the height of the pandemic.

It’s been a long and winding road for the Dow Jones to climb to this level. Here’s a look at the Dow Jones’ trajectory over the past 20,000 points.

The Dow Jones closed above 20,000 points for the first time in early 2017, when investors started pricing in lower corporate taxes in the US under former President Donald Trump. Those expectations were met by the end of that year and also brought the Dow Jones above 25,000 points in January 2018.

However, the Dow Jones struggled in 2018 after excitement over lower taxes faded, with trade tensions between China and the US rising and the Federal Reserve raising interest rates. The Dow Jones ended the year more than 5% lower.

In 2019, the stock market recovered when the Fed refrained from raising rates. At the beginning of 2020, the Dow Jones approached 30,000 points, reaching a high of 29,551.42 on February 12, 2020.

Then came the Covid-19 pandemic. The Dow Jones fell 38% from its February 2020 intraday peak to a low of 18,213.65 in March 2020.

In the following months, the benchmark would recover as progress in developing the Covid vaccine increased and the Fed and lawmakers took unprecedented measures to support the economy. In November 2020, the Dow Jones closed above 30,000 for the first time.

The momentum from the Covid lows continued into 2021, with the Dow Jones rising above 35,000. The good times wouldn’t last much longer, however, as a bear market sent the Dow Jones all the way down to 28,660.51 before recovering. Since hitting that low, the Dow Jones has risen 40%.

– CNBC’s Gabriel Cortés contributed reporting.