The Dichotomy of the Dow

Dow-Jones-Logo1As of Friday's close, the Dow Jones Industrial Average was down 2.5% for the year to date. In 2015, it has traded in a narrow range and has been pretty much a sideways move thus far. However upon closer inspection, its individual components are acting very strangely. The bottom third of the Dow is down 9%+ for the year with 9 stocks down over 14%. With global growth slowing in China and Europe, it is no surprise that industrials, materials and energy stocks are at the bottom of the barrel. On the other hand, the top 8 performing stocks are up 9%+ with 8 stocks up double digits. Healthcare, consumer discretionary and technology sectors are holding up the boat. This is a very bizarre situation and one I can't recall ever seeing before.

Here is a closer look at the numbers. Remember that the Dow is a price weighted index so it is lucky that the best performers have been the higher priced stocks.

UNITEDHEALTH GROUP 21% 121.82 Health
NIKE INC 'B' 19% 114.51 CnDisc
DISNEY (WALT) 16% 109.35 CnDisc
VISA 13% 74.21 Tech
PFIZER 13% 35.19 Health
HOME DEPOT 11% 116.93 CnDisc
BOEING 10% 142.42 Indus
JPMORGAN CHASE & CO 9% 68.05 Fin
MCDONALD'S 6% 98.92 CnDisc
APPLE 5% 115.52 Tech
MERCK & CO. 2% 57.97 Health
CISCO SYSTEMS 1% 28.15 Tech
MICROSOFT 1% 46.74 Tech
TRAVELERS COS (THE) 0% 105.48 Fin
VERIZON COMM -1% 46.36 Telecm
COCA-COLA -1% 41.77 CnStp
INT'L BUSINESS MACH -3% 155.12 Tech
JOHNSON & JOHNSON -6% 98.85 Health
3M COMPANY -9% 148.89 Indus
CATERPILLAR -16% 77.29 Indus
EXXON MOBIL -17% 76.83 Energy
WAL-MART STORES -17% 71.25 CnStp
PROCTER & GAMBLE -17% 75.48 CnStp
INTEL -20% 28.88 Tech
DU PONT E I DE NEORS -24% 53.43 Matrls
CHEVRON -25% 83.75 Energy

The second half of 2015: Up or Down?

The big question is: Will the Dow finish the year up or down? It is unlikely that the laggards will suddenly recover and lead the Dow higher. Energy and materials continue to face deflationary pressures and are unlikely to see a sharp rebound. That means, the Dow is highly reliant on the the consumer, tech and healthcare sectors. The fate of the Dow is in their hands. If the current leaders stumble, it will likely be a bad finish and down year for the Dow.

Do you think the market will finish higher or lower for the year? Let us know in the comments below.

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About the Author: Chris Wang

Chris Wang


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