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MarketsDec 17, 2024

The Dow is Underperforming Other Indexes Like the S&P 500 and Nasdaq 100 — A Historic Losing Streak Isn’t Helping

Benchmark Divergence

Noah Weidner

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Founded in 1896, the Dow Jones Industrial Average is America’s oldest index — and one of its smallest. The media, finance professionals, and others closely follow the index’s 30 stocks, viewing them as a valuable marker of America’s market health. Unfortunately, it seems to be running a temperature. Despite setting numerous records this year, the market benchmark is underperforming peers like the Nasdaq 100 (+33% YTD) and the S&P 500 (+28%). Up just 14% YTD, its stock selection and emphasis on price are to blame.

Names like Boeing and Nike have dragged the index down, with drops of 33% and 29% YTD, respectively — and a flailing Intel was kicked out of the index altogether last month after falling 45%.
Following a recent rebalancing, 24 of the 30 stocks in the Dow are up this year, but the index remains largely unremarkable — 19 are underperforming the S&P 500.

Is the Dow doomed? Since surpassing all-time highs on Dec. 4, the index has fallen for nine consecutive days, its worst losing streak since 1978. Much of the decline comes courtesy of another controversy-addled stock — UnitedHealth, which has fallen 21% since a company exec was shot and killed in New York City. It also doesn’t help that recent addition Nvidia has fallen 5% since joining the index in November. That’s a double-whammy of bad luck for the already weak index.