You have reached your limit of free articles this month.

Enjoy unlimited access to

Starting at just 99¢ for 8 weeks.


  • ePAPER

You have read of premium articles.

Get unlimited access to all of our breaking news, in-depth coverage and bonus content- exclusively for subscribers. Starting at just 99¢ for 8 weeks


Welcome to

This subscriber-only site gives you exclusive access to breaking news, in-depth coverage, exclusive interactives and bonus content.

You can read free articles of your choice a month that are only available on

Wes Moss: what it means when the Dow hits big round numbers

The Dow recently hit a record high of 19,000, triggering predictable excitement.

This new high has been building since the election and is driven largely by bullishness about industries that may benefit from Donald Trump’s victory — financial institutions, defense contractors and industrials.

While Dow 19,000 is welcome news, it’s important to keep things in perspective. Round benchmarks in the stock market are show horses. They are pretty to watch, but they don’t do much to move the market. In fact, these benchmarks can distract investors from truly important aspects of the market.

Here are some important things to remember as you watch and read coverage of Dow 19,000:

  • A 1,000-point gain on the Dow isn’t what it used to be. The rise from 18,000 to 19,000 represents just 5.5 percent growth — and it took almost two years to hit that new mark. Almost 500 trading days to move only 5.5 percent higher. That’s nothing to sneeze at, but also not a huge move.
  • Any stock market number is simply a numerical expression of what companies are currently earning and what they are expected to earn over time combined with how investors are feeling at the moment about the economy and the world at large.
  • So, earnings are what really matter. Aggregate earnings for the S&P 500 are nearly $120 over the past year. That puts this market level, the Dow and S&P 500 at a moderate to moderately high Price to Earnings, which is the real measure of how stocks should be priced. Third-quarter earnings for the S&P 500 rose 3 percent, the largest gain in profits we’ve seen in the past two years. What’s most important is that earnings are still expected to grow close to 10 percent over the next year. This potential earnings growth means infinitely more than the Dow hitting 19,000.
  • Trump’s unexpected White House victory has already impacted the market in a significant way. Typically the stock market likes certainty. That’s why it tumbled every time Hillary Clinton fell behind Trump in the presidential polls. Hillary — for better or worse — represented the known. But the market has thrived on the “positive uncertainty” created by Trump’s win. Investors seem to want to believe Trump will indeed lower taxes, make better trade deals, rebuild our infrastructure, modernize the military and revamp Obamacare. That explains why roughly a month after the election, aerospace/defense stocks were up 12 percent, banks and many financial companies were up 15 percent, and Caterpillar (CAT), a harbinger of infrastructure companies, had jumped 16 percent.
  • The prospect of the economy running hotter than we’ve seen over the past eight years due to Trump’s policies has also impacted interest rates. The 10-year Treasury bond yield has risen to over 2.25 percent since Nov. 8 — a huge jump from its 1.4 percent level in July. That, coupled with the market’s reaction to the possibility of a stronger economy, has dramatically increased the probability that the Federal Reserve will hike interest rates at its Dec. 13-14 meeting.
  • Not everyone can be a winner, even at Dow 19,000. Because bonds and interest-rate-sensitive stocks have an inverse correlation to interest rates, we’ve seen areas like bonds, utilities, and consumer staple stocks dip since the election. Again, this explains why roughly a month after the election, a proxy for the corporate bond market (ETF symbol LQD) was down over 3 percent, and the consumer staples ETF (XLP) was off -2.0 percent despite the S&P 500 being up 5 ½ percent during the exact same timeframe.


Dow 19,000 is a nice milepost, but don’t let it take your eye off the road for too long. There are more twists, turns, mountains and valleys for you to navigate on your investment journey.

Wes Moss has been the host of “Money Matters” on News 95.5 and AM 750 WSB in Atlanta for more than seven years now, and he does a live show from 9-11 a.m. Sundays. He is the chief investment strategist for Atlanta-based Capital Investment Advisors. For more information, go to

Reader Comments ...

Next Up in Business

Classic Barbie gets a 21st century makeover into Hologram Barbie
Classic Barbie gets a 21st century makeover into Hologram Barbie

Mattel has unveiled its newest version of the classic Barbie doll, only it’s not really a doll. It’s a holographic image of a Barbie in a box. The toymaker showed off the new virtual doll, Hello Barbie Hologram, at the annual Toy Fair in New York over the weekend. The new 21st century virtual Barbie is like a Siri or Alexa, only for kids...
Kempner: Losing our Fortune 500 companies should be a clue
Kempner: Losing our Fortune 500 companies should be a clue

Long ago, my fellow Gwinnett voters treated the idea of letting MARTA into the county a bit like suggesting someone put a fire ant on our dinner plate. Gwinnett chairman Charlotte Nash has a clear memory of this. But now Nash says she will push for a new public referendum on transit — though she said she doesn’t know if it would include...
Better than a toaster: Cash to open a bank account
Better than a toaster: Cash to open a bank account

You won’t likely be awarded with a toaster these days when you open a checking account, but a surprising number of banks are offering something even better — Benjamins. Do a little digging, and you’ll learn that several national and local banks are offering $100, $200, even $350 to eligible would-be banking customers to open checking...
Popeyes to be acquired by Burger King parent
Popeyes to be acquired by Burger King parent

Atlanta-based Popeyes Louisiana Kitchen is being acquired for $1.8 billion by the Canadian company that owns Burger King. Restaurant Brands International announced the planned purchase Tuesday. Popeyes chose the RBI offer over a competing offer from Arby’s Restaurant Group, another Atlanta-based fast food chain, according to a Bloomberg report...
Court rules Snuggies are blankets, not clothing
Court rules Snuggies are blankets, not clothing

A federal trade court decision has ended the debate on whether Snuggies are blankets or apparel. The court ruled that a Snuggie is a blanket for tariff purposes, and should not face the higher apparel duty rate as the Department of Justice contended. The ruling was handed down Feb. 10, according to Bloomberg. The judge in the case ruled that Snuggies...
More Stories