Coronavirus Pandemic – Stock Market Milestones: Dow 30K and Nasdaq 12K

Though the major stock indices, including Dow and Nasdaq, fell sharply at the onslaught of the pandemic in March, they have made a spectacular turnaround since then, hitting new all-time highs. Dow reached a historic 30,000 milestone while Nasdaq crossed 12,000. 

After swooning to 18,592 on 3/23 from a February high of 29,551, Dow continued its steady upward swing until 9/1 when it hit 29,101, coming very close to the previous high. It went through a mini-correction in September, falling to 26,763, creating a good re-entry opportunity for the new investors and those who buy the dips. On 11/16, when Pfizer announced its awe-inspiring Phase-3 vaccine results, the index eclipsed the February high, and on 11/24, it crossed the historic 30,000 marks and recovering 11,454 from the March lows.

Though the Nasdaq's story has been similar to that of Dow -- plummeting in March as the pandemic gained momentum -- it has shown more strength since the beginning of the recovery, trending more linearly than the Dow.  For instance, on 6/18, Nasdaq surged past the February high of 9,817 and hit 12,056 on 9/2, making a historic comeback and achieving such momentous feats well ahead of Dow.  

The above regression scatter shows how Nasdaq had outperformed Dow after the intersection point of 26,000 and 9,500. To put it in proper perspective, during the recovery period between 4/1 and 11/25, Dow has bounced back 32%, while Nasdaq has jumped 53% -- a stunning 20% spread, which is why the r-squared value has been a moderate 0.588, rather than the usual lockstep value of 0.90 and above.

Here is a look at the market achievement from a more humane perspective: The pandemic made the rich significantly richer, while the poor further regressed with more all-around devastation, paving the way for a more rapid widening of the ever-expanding wealth gap.

To save the poor and middle-class from the cyclical downturns and future calamities, we need to introduce Universal Basic Income (UBI) as soon as possible so that they can also cheer the Dow 40,000 in chorus. Right now, they are just silent spectators, worrying about money for rent and utilities. Worse yet, in poorer countries, millions of children are going to bed hungry while their mothers are starving.

What a spectacular achievement!

Stay safe!

-Sid Som

homequant@gmail.com