Dow Jones
stocks might not always lead during a market rally, but when it comes
to stability and defense during downturns, they’re hard to
beat.
Take the current market as an example: as of late May,
the tech-heavy and more volatile Nasdaq Composite was down over 3%
year-to-date, while the Dow Jones Industrial Average performed
relatively better, declining just a bit more than 2%.
A big
reason for the Dow’s resilience? Credit goes to the so-called
"Magnificent 7" mega-cap tech stocks. While these giants
powered much of the bull market's gains—and had the most to lose
when the tide turned—only four of them are part of the Dow:
Microsoft (MSFT), Apple (AAPL), Amazon.com (AMZN), and Nvidia
(NVDA).
Another factor working in the Dow’s favor: its
price-weighted structure. Unlike the Nasdaq or S&P 500, which are
weighted by market capitalization, the Dow's method helped soften the
blow from the recent declines in these high-flying stocks.
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