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.
Apple Faces Tariff Uncertainty but Has a History of Exemptions Apple’s strong brand loyalty, high…
Investors anticipating market stability after President Trump’s April 2 tariff deadline may need to prepare…
International stocks posted their strongest first-quarter outperformance against U.S. stocks on record, according to Dow…
Investors Brace for Market Volatility as Trump Plans Sweeping Tariffs U.S. stock futures dipped on…
Hello Traders! Today, I’m thrilled to walk you through my live trading experience using the…
Retail investors are bracing for a decisive moment as President Donald Trump’s April 2 tariff…