Dow’s Most Significant Shake-up in Years

Dow’s Most Significant Shake-up in Years Buoyed by positive momentum for shares of Boeing and Dow Inc., the Dow Jones Industrial Average rallyd Monday afternoon. Shares of Boeing BA, -1.64% and Dow Inc. DOW, -0.24% have contributed about a third of the blue-chip gauge's intraday rally, as the Dow DJIA, -0.09% was most recently trading 344 points, or 1.2%, higher. Boeing's shares are up $10.07, or 6.0%, while those of Dow Inc. have risen $2.52 (5.8%), combining for a roughly 86-point bump for the Dow. American Express AXP, -0.98%, Exxon Mobil XOM, -1.31%, and JPMorgan Chase JPM, -0.92% are also contributing significantly to the gain. A $1 move in any of the index's 30 components results in a 6.86-point swing.

DOW vs S&P 500

For Todd Gordon, managing director at Ascent Wealth Partners, reading too much into Dow shake-ups would be a mistake. “It’s fun to talk about and obviously it’s reflective of a market that’s booming and is moving up, but really, I think it’s more a factor of mathematics,” he said. “They’re just bringing some companies in that are trying to be reflective of the overall economy.” Putting too much emphasis on the Dow itself wouldn’t be wise considering the importance of another major average, Gordon added. “You talk to any trader on the Street, any real investor, any institutional money manager, [they’re] always tracking the S&P 500,” he said. “The big futures in Chicago where they trade it on the floor, that’s the heart of the S&P market. The 500 cash stocks, the 500 largest market caps, those are the real drivers of what’s happening here. So, I just don’t want people to get too caught up in what’s happening in the Dow. Realize the S&P is the barometer that you want to be looking at.” Quintet Tatro, chief investment officer at Jules Financial, disagreed with Gordon, saying, “the average investor on Main Street speaks in the Dow.” “I agree that long term in the averages we always talk about performance in relation to the S&P, but you ask any Main Street investor and they know that that Dow is headed to 30,000 and that’s an important milestone,” Tatro said. “That’s a psychological number. So, they still speak Dow on Main Street for sure.” The S&P has outperformed the Dow over the last one, two, three, five and 10 years. However, the Dow has outperformed over the last 20, 30 and 40 years. Stocks opened flat Wednesday after another record close for the S&P.   You might also be interested in:

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