IBM Saves the Dow

The Dow Industrials is a price-weighted index. That means it’s calculated by adding up all 30 stocks in the index and dividing by a divisor. The divisor is carried each day in the Wall Street Journal.

The current divisor is 0.14602128057775. To make it easier, every $1 in a Dow stock works out to about 6.848 Dow points.

This morning, Boeing (BA), a Dow stock, is up about 8% which is around $16 per share. At the time I checked, BA was responsible for 115 points in today’s 117-point Dow rally. Boeing is now the highest-priced stock in the Dow which means it has the largest weighting.

But Boeing is far from being the largest stock in the index by market cap. At last check, BA comes in 21st out of 30 in terms of market value. The Dow Industrials gets a lot of attention from the media, but it’s an anachronism. That’s why I prefer to follow the S&P 500.

Posted by on July 26th, 2017 at 11:31 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.