Milestone Moment: Dow Jones Closes Above 2,700

Name: Milestone Moment: Dow Jones Closes Above 2,700
Start: 1987-08-17
Location: Unspecified

The Significance of the 1987 Dow Jones Closing

On November 27, 1987, an important milestone in stock market history was achieved when the Dow Jones Industrial Average closed above the 2,700 mark for the very first time, specifically at 2,700.57. This event was not just a number; it symbolized investor confidence and marked a period of economic growth during a time of recovering from the earlier market downturn.

The Bull Market of the 1980s

The move above 2,700 can be viewed in the context of the strong bull market in the 1980s. After a turbulent time in the late 1970s, characterized by inflation and economic stagnation, the U.S. economy began to rebound. The policies of President Ronald Reagan, particularly his tax cuts and deregulation efforts, spurred economic optimism, contributing to a robust stock market.

Factors Contributing to the Climb

Several factors contributed to the climb of the Dow Jones, leading to this historic close. A booming economy, restrained inflation, and increasing corporate profits offered a conducive environment for stock market growth. Additionally, the increasing participation of average investors symbolized the democratization of the stock market.

A Prelude to the 1987 Market Crash

The achievement of the 2,700 milestone would soon be overshadowed by the infamous stock market crash of October 1987. Investors were initially jubilant, but by the time of the crash, the market had reached a level of inflated valuations that could not be sustained. However, the closing above 2,700 was emblematic of an era where the market was perceived as unshakeable.

The Aftermath and Recovery

Following the crash, the Dow Jones underwent a remarkable recovery, and by the early 1990s, stock prices had surpassed their pre-crash levels. The occurrence on November 27, 1987, stands as a testament to the cyclical nature of markets and how momentous events can shape investor sentiment.

The Impact on Future Investments

This specific closing helped lay the groundwork for future investors to trust in the market long-term, showing that intervals of growth, even after declines, were possible. The resilience witnessed in the years following encouraged a greater influx of retail investors into the stock market as optimism grew.

Fun Fact

A Notable Trivia from the 1987 Dow Milestone

Interestingly, shortly after the Dow first closed above 2,700, Black Monday occurred on October 19, 1987, which marked one of the largest single-day declines in stock market history.