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How Long Until Dow 40,000, S&P 5,000, and Nasdaq 20,000?

The S&P 500 is about to top 5,000 for the first time. Will the Dow reach 40,000 and the Nasdaq 20,000 by year’s end? Here’s what it would take.

Stock Growth Ball in Hand Glow Magic Foretelling the Future when Dow reaches 40,000, S&P reaches 5,000 and Nasdaq reaches 20,000

The bull market is in full force, pushing the major indexes to new all-time highs. The S&P 500, in fact, is on the cusp of a major psychological threshold: 5,000. It may get there by the time you read this. Considering the benchmark U.S. index dipped below 4,000 less than a year ago – it didn’t climb above 4,000 for good until last April – that’s quite an accomplishment. With S&P 5,000 all but in the bag, are Dow 40,000 and Nasdaq 20,000 not far behind?

Let’s do the math on how long it might take for the other two major indexes to reach those milestones.

Dow 40,000

Remember when Dow 20,000 was such a huge milestone? That was less than seven years ago. Now it’s well over 38,000—despite the fact that the Dow has been the slowest-rising of the three major stock market indexes, though it also fell a lot less than the other two in 2022. All told, the most staid of the three major indexes is up a mere 11.5% in the last two years … with ALL of the gains in the last three months, since the rest of the market finally caught up with the Magnificent Seven and a few red-hot artificial intelligence stocks. With the Dow currently at 38,700, it would take only a 3.4% run-up for it to reach 40,000. That seems pretty realistic this year, though it could take a few months given how rapidly the market has already run up since the start of November.

I’d bank on Dow 40,000 by the summer.

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Nasdaq 20,000

This milestone is much farther off, although we’re also talking about the index that tends to move the fastest. The Nasdaq has added nearly 4,000 points in the last year, a 30% gain, thanks mostly to the aforementioned Mag Seven and AI stocks, though other tech-related plays – for which the Nasdaq is known – have joined the fray in the last three months as the bull market has expanded to more inclusive.

Still, it would require an additional 4,000 – 4,230 as of this writing, to be exact – for the Nasdaq to attain 20,000. That’s roughly a 27% gain. I don’t see that happening this year. Not after a 54% gain (!) in 2023. True, the Nasdaq is fully capable of posting consecutive years of large gains; in fact, the index is up 26% or more in four of the last five years, with the 33% retreat in 2022 being the major exception. But, given how stretched the Magnificent Seven are these days, and with plenty of potential macro landmines out there (a presidential election, multiple wars, the Fed potentially pushing out rate cuts, etc.), I’d be surprised if the Nasdaq is up 27% between now and year’s end. It could happen next year, though that will depend on how long the current bull market lasts. Regardless, Nasdaq 20,000 will take far more time than the other two.

Of course, here’s the part where I remind you that past returns are not indicative of future performance. Even as the current stock market picture grows brighter by the day, there’s always the chance that an unexpected event (like, say, the global pandemic in 2020) can knock it back.

But chances are, stock prices will be higher a year from now than they are today. Perhaps significantly higher.

Ultimately, big shiny numbers don’t really matter anyway when it comes to indexes. They’re convenient measuring sticks and fun talking points. And with the bull market in full swing, it’s a good time to dream big.

When do you think the major indexes will hit these new all-time highs?

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*This post is periodically updated to reflect market conditions.

Chris Preston is Cabot Wealth Network’s Vice President of Content and Chief Analyst of Cabot Stock of the Week.