Wall Street’s rally last Tuesday saw the Dow passing the important psychological milestone of 30,000 points for the very first time. This came as US stocks rose with the news of a potential Covid-19 vaccine and the clearance of Joe Biden to be confirmed as the next President of the US.
It’s a remarkable fightback considering that the Dow Jones Industrial Average plunged an astonishing 35% when the pandemic first struck last spring. The Dow measures the average performance of the 30 highest ranking companies and provides an overview of the nation’s economic performance.
Tech companies leading the way
Such companies include tech heavyweights like Apple and Microsoft who have both enjoyed soaring growth rates of over 40% this year. Relatively new faces in the tech field like Zoom have joined the likes of Facebook, Amazon and Twitter in posting strong earnings to push the Dow past the 30,000 mark.
While these figures are hugely encouraging, there are still areas of concern in the industries hardest hit by Covid-19. Namely brands working in the energy and financial industries are taking longer to adapt to the changing circumstances with oil titans like ExxonMobil suffering a loss in value of over 50%.
Overall, the Dow has gained approximately 4% in 2020. This has helped the Dow Jones reach the 30,000 milestone just four years after it hit the 20,000 mark. Such news is significant as it took the Dow 17 years to reach 20,000 from 10,000. Plus the Dow even sank to a concerning 7,000 points after the recession just over a decade ago.
The 30,000 milestone will add to the hope that the US economy can overcome the monumental challenges that the country is still facing. Continued job losses have pushed up unemployment rates to nearly 7% and a second surge in Covid-19 cases is threatening to wreak havoc across the nation.
Despite this, markets have reacted favourably to the selection of Janet Yellen as the next Treasury Secretary. Plus President Trump appears to finally be giving way for a smooth transition for President-elect Joe Biden to come to power.
Much depends on how the new administration deals with the worrying situation that the US has found itself in. A new fiscal relief package would be needed if the pandemic continues to take hold, and with the government still in limbo, it could be a shaky few months ahead.