|Day's Range||24,781.84 - 25,145.98|
|52 Week Range||18,213.65 - 29,568.57|
The stock market opened sharply higher on Tuesday following the long Memorial Day weekend. Bank stocks were some of the strongest performers. Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC) were leading the big U.S. banks, higher by 8.2% and 6.3%, respectively.
Merck is going after COVID-19 from multiple angles, and McDonald's should benefit from rising restaurant visits.
Both the Dow Jones Industrial Average?(DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) rose over 3%. Costco's stock has outperformed during the recent market slump thanks to its persistently strong operating trends. The chain's earnings report on Thursday will include other important metrics like membership fee income, customer traffic, and subscriber renewal rates in both the U.S and international segments.
(Bloomberg) -- This week marks a milestone for the Dow Jones Industrial Average: its 124th birthday. Not that anyone watching markets needs a reminder it’s getting old.Wrinkles show in the gaping divide between the venerable gauge and its younger brethren. Like many grandparents, it’s struggling to keep up with tech. Plunges in Boeing Co. -- its biggest member at the start of February -- were very costly, and some wonder if the benchmark represents the 21st century economy at all, especially in the coronavirus age.“The Dow has been on its way out for years,” said John Ham, associate adviser at New England Investment and Retirement Group. “Obviously it’s going to stick around just because so many people are familiar with it. But as far as relevancy goes, it’s your grandfather’s index.”Rarely have differences among indexes been more stark than they are now, in a market where the outbreak has made heroes of New Economy firms. Deprived of their benefits, the Dow remains down 14% in 2020 and was off 35% at its worst point. Meanwhile, the Nasdaq 100 has gained more than 7% this year, and the S&P 500 is 9% away from a positive return.Of course, the Dow has been consigned to history before, and survived. While it might be showing its age now, brief divergences among broad indexes are extremely common, and over long enough intervals they tend to even out.“Yes it is old,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. “If you constructed something today, you would probably do it differently. But it’s worked for 124 years. Even currently. And it is a much smaller portfolio yet it does track over time to the broader S&P 500.”Judging an index by whether it rises more than another misconstrues the purpose of stock benchmarks, which is to measure the progress of a market. The S&P 500’s edge over the Dow in 2020 doesn’t make it a better or more useful tool. It does, however, shine a light on what in the economy is calling the shots during the lockdown -- online and automated companies like Amazon.com Inc. and Netflix Inc.Divergences among the gauges also matter to the masses of investors who invest in funds that track them. Roughly $11.2 trillion is indexed or benchmarked to the S&P 500, according to S&P Dow Jones Indices, and $4.6 trillion in passively managed assets are tied to it. About $31.5 billion is benchmarked to the Dow, with $28.2 billion of passively managed funds linked.Thanks to tech’s dominance, those divisions are getting especially pronounced. Less than halfway through the year, the Nasdaq has already outperformed the Dow by a full percentage point on 17 different days. That’s more than in any full year since 2009, data compiled by Bloomberg show.A lot of the discrepancy boils down to which companies don’t make the Dow’s cut. Take Amazon.com, for example, whose 35% gain this year has accounted for almost half of the Nasdaq’s advance and 10% of the S&P 500’s. Because of the stock’s $2,500 price tag, the Dow’s old-fashioned price-weighting system makes it impossible to let Amazon in.Other high-fliers that have proved themselves in a stay-at-home world also don’t appear in the Dow. Nvidia Corp., Netflix Inc. and PayPal Holdings Inc. -- all winners in the coronavirus age -- are each up at least 30% this year. The venerable Dow has gotten none of that boost.“If all you’re following is the Dow, you’re missing some big components,” said Ryan Detrick, senior market strategist for LPL Financial. “I hate to say it’s old, but there’s no question that it’s behind the times if you look at the way it’s broken down.”The Dow Jones Industrial Average, created on May 26, 1896, is different from other indexes. It’s weighted by share price rather than market cap, which is more commonly used today. Such methodology essentially rules out inclusion of several of the largest companies in the world, among them Google parent Alphabet Inc., whose shares trade above $1,000 and would likely take up too much of the index.A committee chooses members, not an objective, rules-based process. According to Dow Jones Averages methodology papers found on its website, the Dow seeks to maintain “adequate sector representation” and favors a company that “has an excellent reputation, demonstrates sustained growth and is of interest to a large number of investors.”As a result, a company like jet-maker Boeing Co., down 60% this year, is more influential on the Dow’s performance than even the fourth largest American company, Alphabet, is on the S&P 500’s returns. Industrial firms, as the name of the index suggests, make up a notable 13% of the Dow -- 5 percentage points more than the sector’s weight in the S&P 500 and 11 percentage points more than the Nasdaq.Such focus has hurt in a pandemic-arranged stock market, where closed factories and shuttered economies have left industrials as one of the worst performing groups. The emphasis on the old-age economy is all the more striking in a world where companies that can operate with little face-to-face contact excel and a technological shift is accelerated.“That’s the unique nature of this particular recession, and it’s coming from the virus,” said Luke Tilley, chief economist at Wilmington Trust Corp. “If you take those contours of both big companies tend to have a buffer because of their access to capital markets and then you compound what is expected to be a dramatic change to the economy, you can get that bifurcated performance.”That leaves another way to view the index gap: the Dow is perhaps the stock gauge that is most representative of the broad economy precisely because it’s not dominated by these megacap firms. Surging shares of Amazon or Netflix certainly don’t reflect an America with over 20 million people unemployed and a collapse in spending.While the S&P 500 and Nasdaq may be methodologically optimized for a stay-at-home world, the Dow is certainly not.“Covid is actually amplifying all types of inequalities in the economy but the inequality in the market in terms of market concentration is also being amplified,” said Nela Richardson, an investment strategist at Edward Jones. “That rally is highly concentrated in a handful of firms. Most firms are still in bear territory.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
Geopolitics will be a key driver in the week. Brexit and the Pound and a collapse in the U.S – China relations will be a test riskier assets.
Stocks edged down Friday morning as ongoing signs of the economic damage from the coronavirus pandemic compounded with fears of rising U.S.-China tensions. A slew of quarterly corporate earnings results came in mixed.
IBM is laying off employees amid the pandemic, and Apple wants to use podcasts to promote its Apple TV+ streaming service.
The Zacks Analyst Blog Highlights: ExxonMobil, Chevron, National Oilwell Varco, HollyFrontier and Halliburton
Nela Richardson, Edward Jones Investment Strategist, joins Yahoo Finance's Alexis Christoforous and Brian Sozzi to discuss overall markets and what she is keeping a close watch on.
Stocks ended little changed Friday, as ongoing signs of the economic damage from the coronavirus pandemic compounded with fears of rising U.S.-China tensions. Still, the three major U.S. equity indices posted weekly advances of about 3%, with investors largely factoring in the fallout from the COVID-19 crisis into asset prices.
Alex Reffett, Principal at East Paces Group, joins The Final Round to discuss how Baby boomers and Gen-Xers can work to recoup their market losses for retirement.
The Conference Board Senior Economist Erik Lundh joins Yahoo Finance’s Brian Cheung and Zack Guzman to discuss China's plans set up national security agencies in Hong Kong and the growing tensions between Beijing and Washington.
Former COO of Stitch Fix Julie Bornstein joins Yahoo Finance’s On The Move panel to weigh in on the launch of her new shopping platform ‘The Yes’.
Entourage Effect Capital Managing Partner Matt Hawkins joins Yahoo Finance’s On The Move to assess how the coronavirus has impacted the cannabis industry.
Mergers and acquisitions have taken a hit amid the coronavirus crisis. MMG Advisors Co-Founder and Senior Managing Partner Allan Ellinger?joins Yahoo Finance’s On The Move panel to assess the outlook for M&A and weigh in on the retail apocalypse.
As more states continue to reopen, people are questioning how the government will prevent a new spike in COVID-19 cases. Sinan Aral, David Austin Professor of Management at MIT and Author of “The Hype Machine” joins Yahoo Finance’s On The Move to discuss why states need to coordinate reopening amongst each other.
According to a new assessment from risk assessment firm?RapidRatings, the U.S. airline most in danger of going bankrupt is American Airlines. Rapid Ratings CEO James Gellert joins Yahoo Finance’s On The Move panel to discuss.
Quincy Krosby, Prudential Financial Chief Market Strategist, joins Yahoo Finance to discuss the overall markets around Friday's opening bell. Krosby also weighs in on what companies she's keeping an eye on, including Disney, Carnival Cruise Lines and more.