Boeing a Drag on Dow as Blue Chip Average Nears All-Time High

Boeing is the most heavily weighted stock on the price-weighted Dow, and that is preventing the average from moving neck-and-neck with the S&P 500 toward all-time highs.
James Hyerczyk
Boeing Manufacturing Facility and Logo
Boeing Manufacturing Facility and Logo

The benchmark S&P 500 Index and blue-chip Dow Jones Industrial Average closed higher on Monday, boosted by optimism over U.S.-China trade relations as well as positive expectations for the earnings season.

Additionally, the S&P 500 rose 0.7% to 3006.72, notching its first close above 3000 since September 18. The Dow advanced 57.44 points, or 0.2% to 26827.64.

Furthermore, the S&P 500 could hit the all-time high set in July this week. The broad-based index is just 0.7% from reaching 3027.98, the record from July 26.

Meanwhile, the Dow is nearing its all-time high also set in July. It is 2.10% from hitting 27398.68, the record high from July 16.

What is Slowing the Dow?

So why is the Dow lagging the S&P 500 Index? The answer is Boeing. Although Boeing is a component of the S&P 500 Index, it is one of 500 stocks. In the Dow, it is one of 30 stocks.

In the S&P 500 Index, Boeing is weighted 0.742134%. In the Dow, Boeing is weighted 8.706019. Furthermore, because the Dow is price weighted, the stock’s with the highest price get the biggest positions in the benchmark, and no components in the Dow are even close to Boeing’s $300-plus price tag. Additionally, Boeing is the 30-largest stock in the S&P 500 and not part of the NASDAQ.

The Dow Jones Industrial Average would be a lot higher if Boeing wasn’t dragging it down. Recently a 4% drop in shares of Boeing, translated into a nearly 13 point drag on the Dow. Just three-days ago, a 6.8% drop in Boeing, shaved more than 25 points off the index.

Boeing is the most heavily weighted stock on the price-weighted Dow, and that is preventing the average from moving neck-and-neck with the S&P 500 toward all-time highs.

What’s Wrong with Boeing?

It’s a troubled company. Earlier in the year, the aircraft maker was ordered to ground its entire fleet of 737 Max in March after two of the jets crashed, killing 346 people. Last Friday, the FAA and the U.S. Department of Transportation said they were investigating whether Boeing withheld information during the certification process of its bestselling 737 Max.

Why is This Important Now?

We’re talking about Boeing today because it is due to report earnings on Wednesday morning before the New York market open.

It’s been in the news so investors will be watching the earnings report. Buyers could come in big if the report comes in better than expected, especially when combined with the hope of a U.S.-China trade deal. This could drive the Dow sharply higher.

On the other hand, negative news from Boeing could help offset good news about the trade deal or other strong earnings data. The S&P 500 Index and the NASDAQ Composite could hit new all-time highs, while the Dow struggles.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US