We crossed a key milestone that deserves attention: the Dow Jones Industrial Average crossed 50,000. Just eight years ago we were celebrating 25,000, which means equities have doubled in less than a decade. By the Rule of 72, that’s roughly a 9% annual return including dividends—nominal, yes, but still a powerful reminder that equities continue to reward patience even through extraordinary volatility, policy shocks, and repeated predictions of recession.
What makes this milestone particularly notable is the market backdrop and context. Several of the Magnificent 7 tech stocks cracked sharply, reigniting concerns the AI trade is overcrowded and that capital spending expectations were running far ahead of realizable returns. Yet despite the pressure in tech leaders, the Dow notched a new all-time high and finished the week up roughly 1,200 points. This is not a market being propped up by only a handful of mega-cap technology names. The rotation is real, it is persistent, and it is healthy.
Back on tech: I believe Jensen Huang when he says he has never seen demand like this. The AI build-out is a new industrial revolution, and even legacy assets—“old chips” as he put it—are rising in value because demand is so intense. Yet investors are asking the right questions. When companies talk about $200 billion in capital expenditures, markets should scrutinize payback periods, competitive dynamics, and whether durable moats can be built in an environment where technology is evolving at breakneck speed. That tension explains why leadership will continue to rotate even as the secular story remains intact.
On the economic front, the labor data softened modestly but not alarmingly. Initial jobless claims ticked higher, and the JOLTS data came in weaker than expected. Some of this can be attributed to temporary factors, including unusually cold weather during the survey week, but the market clearly took notice. Midweek, we saw a classic defensive move: Treasuries rallied and the 10-year yield fell by 6 to 10 basis points before retracing part of that move during Friday’s relief rally. Next week’s delayed payroll report will be important, but nothing in the data suggest the labor market is “falling apart.” This looks far more like cooling than contraction.
Earnings season continues to reinforce that view. With roughly three-quarters of the S&P 500 reported, the earnings beat rate is slightly less than 70%, slightly below the 10-year average but still very solid. But more important, the aggregate earnings beat is running around 9%, well above the historical norm of 7–8%. This is not as strong as the blowout 3rd quarter we saw late last year, but it is more than sufficient to support equity valuations, especially as inflation continues to ease and real rates remain manageable.
We also saw some overdue air come out of momentum-driven trades in gold, silver, and other hard assets. Much of the recent weakness looks like a classic pull-back toward trend rather than a fundamental breakdown. The longer-term trend lines in gold and silver remain intact. Whether recent highs prove to be multi-year peaks like 1980 is unknowable, but nothing in the price action suggests a structural end to the story.
Bitcoin deserves a brief mention, though I remain very clear that I do not forecast cryptocurrency prices. The recent drawdown was substantial—at one point cutting prices roughly in half from the highs. Optimists correctly note that Bitcoin has survived multiple 70–80% bear markets in the past and gone on to new highs. Skeptics counter that Bitcoin is now more mature, with ETFs widely available and fewer incremental buyers waiting on the sidelines. Questions are also being raised about relative utility of bitcoin versus other blockchain applications and tokenization platforms. What is undeniable is the wealth effect: with several trillion dollars of wealth in crypto, a 30–40% drawdown inevitably spills over into broader risk assets through margin calls and portfolio realignments. That cross-selling pressure likely contributed to volatility we saw in other momentum trades.
Looking ahead, the macro backdrop remains constructive. Tax refunds are beginning to flow, providing near-term support to consumption. The government is funded through September 30, eliminating shutdown risk for the better part of the year. The appointment of a new Fed chair has gone a long way toward calming fears about central bank independence, though markets will continue to scrutinize policy signals carefully. The remaining near-term political risk centers on the upcoming Supreme Court decision on tariffs, the third and final “bump” markets have been waiting to clear. With the first two behind us, a favorable resolution there would reinforce what already looks like clear sailing in 2026.
On monetary policy, I want to clarify a point that has resurfaced in recent commentary around Kevin Warsh and past criticisms of quantitative easing. I did not sign onto the inflation warnings surrounding QE2 and QE3 because those programs largely sat in excess reserves and did not translate into money supply growth. Inflation follows money supply, not reserves—a lesson I learned clearly when studying with Milton Friedman. QE1 was essential; later rounds were largely redundant, but they were not the inflationary disaster Warsh and many feared. Looking forward, I do support a gradual return to a scarce-reserves framework, where the Fed funds rate once again reflects true supply and demand rather than administered rates on reserves. That said, this is a very long-term structural discussion, not something that will meaningfully affect near-term policy or markets this year.
Finally, the international picture is also improving with further evidence of the broadening out of trades in markets. Japan’s political developments are encouraging as Takaichi won a major political victory. The WisdomTree models team believes Japan remains a favored international market on a combination of discounted valuations, strength in the industrial and AI supply chains supporting earnings growth and added pro-growth initiatives—including increased spend on defense technologies. Takaichi’s strong showing represents another step in reform-oriented elections in places like Argentina that highlight a renewed appreciation for free market-based solutions after years of disappointment with state-heavy models. These trends matter for U.S. investors because they support global growth, capital flows, and earnings opportunities outside our borders.
Past performance is not indicative of future results. You cannot invest in an index. Professor Jeremy Siegel is a Senior Economist to WisdomTree, Inc. and WisdomTree Asset Management, Inc. This material contains the current research and opinions of Professor Siegel, which are subject to change, and should not be considered or interpreted as a recommendation to participate in any particular trading strategy, or deemed to be an offer or sale of any investment product and it should not be relied on as such. The user of this information assumes the entire risk of any use made of the information provided herein. Unless expressly stated otherwise the opinions, interpretations or findings expressed herein do not necessarily represent the views of WisdomTree or any of its affiliates.
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