Analysts are already calling for Dow 40,000. And they think just eight S&P 500 stocks will drive a bulk of the surge.
Thanks to expected Dow point contributions of 164 or more from eight stocks like Microsoft, Boeing and UnitedHealth, analysts think the Dow Jones Industrial Average will trade for 41,940 in 12 months, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. And if they're right, that would mark a more than 7% rally from Tuesday's closing price.
The Dow could use a kick in the pants. The average of 30 blue chip stocks is only up 3.4% this year. That trails the 6.9% gain in the Nasdaq 100 and 6.7% rise of the S&P 500.
No wonder high-octane Amazon.com was added to the Dow on Feb. 26. "Amazon will join Microsoft and Apple as the other Magnificent Seven stocks in the index, which together will comprise about 13% of the DJIA," said Arun Sundaram, analyst at CFRA.
But Amazon isn't where analysts see the very biggest gains coming from.
Stocks Driving Dow To 40,000
The Dow gives more weight to members with the highest share prices. And that creates a big opportunity for the 513-a-share health insurance company UnitedHealth.
Analysts think UnitedHealth's stock will rise nearly 16% over the next 12 months. That would be quite a reversal for a stock down 2.5% this year so far. But if analysts are right, it would mark a 534 Dow-point addition to the blue-chip average. That's more than any other Dow 30 stock is expected to contribute.
Next up is AI titan Microsoft. Analysts think the stock will rise more than 14% in the next 12 months. And if they're spot on, it would add 381 Dow points. Not far behind is ailing aerospace firm Boeing. Analysts think the stock, down 23% this year, will rise 28.3% in the next 12 months. And if so, that would add 373 Dow points.
Clearly, lots can happen between now and a year from now. But analysts seem to think Dow 40,000 is only a matter of time.
Biggest Contributors To Dow 40,000
| Company | Ticker | Upside to 12-month target | Dow points added in 12 months (est.) |
|---|---|---|---|
| UnitedHealth Group | 15.9% | 534.9 | |
| Microsoft | 14.3% | 380.9 | |
| Boeing | 28.3% | 372.9 | |
| McDonald's | 10.9% | 209.6 | |
| Amazon.com | 17.5% | 199.0 | |
| Chevron | 17.0% | 169.5 | |
| Goldman Sachs | 6.5% | 166.5 | |
| Amgen | 9.0% | 164.8 |
