The S&P 500 is up 18% YTD and powering toward its biggest first half since 1997. For bulls, the next question is “how long until Dow 30,000?” writes Jack Hough in Barron’s.

“In early 2017, when the DJIA hit 20,000, Barron’s wrote in a cover story that 30,000 by 2025 looked likely, assuming a cut to corporate taxes, and no trade war. A 50% gain over nine years is 4.6% a year, compounded. Investors got the tax cut, but also the early salvos of a trade war. Yet the Dow has already climbed by one-third since our cover story. That’s a rip-roaring 12.7% a year. It doesn’t count dividends.”

“The real wild card is interest rates, or more specifically, how investors respond to them. Futures markets show near-certainty of the Fed returning to rate cuts this year. Looking at seven initial rate cuts since Ronald Reagan, the market has returned a median of 14% over the following year.”

“U.S. stocks trade at 17 times forward earnings estimates, about where they were in early 2017. Assuming they hold that valuation, the earnings outlook implies potential for yearly gains of 5% or so from here.”

“Where does that leave us on the Dow? So long as we can agree that precise targets are folly, we’ll drop our date but stick with our 4% to 5% yearly return. From here, that means 30,000 by the end of 2021.”

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