By SIMON CONSTABLE
With the Dow Jones Industrial Average standing today around 47000, it’s hard to get excited for every 1,000-point milestone. But 30 years ago was a different time for the Dow.
After passing the 4000 threshold in February 1995, the Dow industrials took only nine months to pass and close above 5000 — bringing cheers from the New York Stock Exchange floor.
As with many market parties, this one was started in large part by the Federal Reserve. After raising interest rates in 1994, the central bank began cutting them in July 1995 amid a belief that it had guided the economy to a “soft landing.” The result was that bond volatility fell, and stocks rallied.
“Typically, what goes down comes up,” says David Salem, a portfolio manager at Hedgeye Asset Management.
Market strategists at the time — pointing to falling interest rates, rising productivity and tame inflation — saw little reason for the party to end. Spectacular market gains would follow.
And while markets don’t celebrate like they used to, Salem sees some parallels between markets then and now. After raising rates to beat back inflation in 2022–23, the Fed began cutting rates last year and the Dow has surged.
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