Blog: Dow Gets the Ovations, but What About the FTSE?
Dow 10,000 may sound impressive, but look back just two years, and the index of the 30 biggest US shares was sitting comfortably above 14,000.
Only a big fall from grace would allow the index to once again breach a level that it had already soared through many years ago. In fact, the first time the Dow hit 10,000 (March 1999) Hugo Chavez first became President of Venezuela, energy powerhouse ExxonMobil was formed, and a bright-eyed and bushy-tailed Britney Spears was unleashed upon the world.
But its not just US stocks going back in time. In the UK, traders were cheerleading the FTSE 100 index through the 5,000 point earlier this month. But just last year, the prospect of the Footsie languishing at such a level was more of a nightmare scenario than something to celebrate.
Back then, the index was at 6,500, thanks to a boom-time rally. Go back further, to 1999, and the index was pushing 7,000 and celebrating an all-time high. So how long do these round-number breaches last, and will they ever be sustainable?
Back in the 1984 the index was formed, born with a value of 1,000. During the decade, it took the Footsie two attempts to break the 2,000 level. Black Monday pushed the index below the 2,000 mark, but less than two years later it was back — and it’s never been below 2,000 since.
Onwards and upwards, and by 1993 the Footsie had breached 3,000, albeit only to fall back until 1995, when the index finally cleared this hurdle. And (so far) the 3,000 level has proven to be another buffer that the index has never returned to.
This has proved somewhat more elusive for the Footsie. The index first reached this level in 1996. In fact, over the next few years, the dot-com boom accelerated the index towards the dizzy heights of 7,000, before delivering it safely back to 4,000 in 2002 — in the form of the subsequent dot-com bust. A year later, the Footsie was happily in the hands of another rally. But more than 12 years after first gloriously breaking through this level, it was back to 4,000 again after the supreme market crash of October 2008.
So, here we are, celebrating (again) the 5,000 level. But will it be the last time? Unfortunately, the past could come back to haunt the beloved (by some) Footsie.