Better Late Than Never

Last week, the Dow (DIA) finally caught up to the rest of the major US indices in surpassing its pre-Iran war highs. Since that move to new highs, the oldest US index has been moving sideways for the last couple of days.

A look at the performance of major US indices from 2/10 through 5/21 - the period the Dow went between highs - illustrates how much the index has lagged its peer indices. While the DJIA rallied just 0.19% during that span, every other major US index was up at least 6%, with the Nasdaq 100 (QQQ) blowing them all out of the water, gaining nearly 14%.

While the Dow has lagged its peer indices, on an equal-weighted basis where each component’s performance is treated equally, the Dow’s underperformance doesn’t look quite as bad, at least relative to the S&P 500 (SPY). As shown in the chart below, while the 30 Dow components were down an average of 0.24% from 2/10 through 5/21, the average S&P 500 component was up just barely 1%. The average Russell 2000 (IWM) component, however, was still up close to 6%, while the average performance of the stocks in the Nasdaq 100 is even higher than the index’s performance.

Turning back to the Dow, breadth in the index from 2/10 through 5/21 was skewed to the downside. The chart below shows each component’s impact on the index in terms of points during that period. Caterpillar (CAT) has had the biggest positive impact, responsible for 761 upside points, followed by UnitedHealth (UNH) at 673 points. Trailing way behind in third place, Amazon.com (AMZN) has added 379 points to the index’s performance.

On the downside, Home Depot (HD) and Sherwin-Williams (SHW) have had a combined downside impact of just over 800 points, illustrating housing market weakness. Pointswise, there wasn’t much in the way of train wrecks at the individual stock level, but just a lot more malaise than clear sailing ahead.