The Dow’s underperformance can be partly attributed to its structure as a price-weighted index, where higher-priced stocks like UnitedHealth Group have more influence than tech giants like Apple and Microsoft. This is unlike the S&P 500 and Nasdaq Composite, which are weighted by market capitalization.
In 2024, the Dow Jones Industrial Average significantly lags behind other major indexes, with the S&P 500 outperforming it by 12.65 percentage points as of Tuesday. This gap is near historic levels, closely following last year’s 12.8 percentage-point difference.
Megacap tech stocks have driven most of the gains for the S&P 500 and Nasdaq Composite this year, leaving the less tech-heavy Dow behind. From October 2022 to June 2024, the S&P 500 saw a 55% total return, with 60% of that from just 10 stocks, according to Ronald Temple of Lazard Asset Management. Despite predictions for a broader rally, the market remains tech-focused.
The divergence extends beyond the Dow and S&P 500; the S&P 500’s equal-weight version is up only 3.9% in 2024, compared to 16.9% for the standard index. This performance gap mirrors the dot-com bubble peak in 2000, as noted by Bespoke Investment Group analysts.
Skeptics argue that a shift away from megacap stocks could help lagging sectors catch up, potentially stabilizing or boosting the broader market.
Keeping your NinjaTrader indicators and strategies up to date is crucial for efficient trading. In…
Small-cap stocks are navigating a fog of uncertainty surrounding the U.S. economy and Federal Reserve…
Analyst Joe Tuckey suggests that a larger rate cut from the Federal Reserve may indicate…
Whether the Federal Reserve can prevent a recession in time could be crucial. A Fed…
Hello traders! In today’s session, we’ll explore how to effectively trade both the NASDAQ and…
On Thursday, the Russell 2000 index, which focuses on small-cap stocks, saw a strong rise,…