So what? The Dow is a terrible indicator of even how well the stock market or the economy as a whole is doing. It is price weighted instead of market cap weighted so smaller companies that released fewer shares at a higher price have more impact on the Dow than larger companies. http://www.npr.org/sections/money/2017/01/04/508261371/episo...
I wish that we could just drop the Dow entirely and focus on the more modern indices like the S&P. I understand it has historic significance, but let the DOW lie.
>I wish that we could just drop the Dow entirely and focus on the more modern indices like the S&P.
I don't get it. Is someone forcing "us" to use the DOW in some manner? It is what it is, use the information how you choose.
This reminds me of people who complain about how the BLS calculates specific measures of inflation or unemployment. They list their methodology. Either you find the information important and useful, or you can choose to ignore it. We don't have to "drop" anything.
It is a historic thing. Once (ie the 1950s) calculating the S&P500 took hours - newspapers did it after the market closed for the night and the number was one of the last things put into the paper before printing. The dow could be calculated in a few minutes so radio and TV could report on it. Thus if you were a trader focused mostly on one stock, updates on the dow gave you a picture of the market - if the dow was moving it was a clue that there might be larger economic forces in play that you need to look into so see how it affects your stock.
Today we can calculate all the indexes several times a second. Thus the value of the dow (something easy to calculate) is not important today and we shouldn't use it.
No one is forcing you, but when the cultural zeitgeist is behind it (reported every day in the pop news, especially when rising) it promotes mass financial illiteracy.
I think it's a lost cause, just like the metric system in the USA, but dropping the Dow and focusing on more accurate measures would, in a small way, focus people's attention on more important economic news.
The Dow is supposed to be easy enough to do by hand. Around 12 to 15 stocks, all with just the price. Its an invention of the early 1900s. Its more of a historical measurement that we keep using because... well... it works. And people are familiar with it.
But yeah, as the other posters have said: S&P500 just hit a record high. So the underlying fact is "Stock Market reaches new highs" by any sane measurement.
Especially since people get voted out of office went the major indexes lose significant value. So there is significant political pressure to maintain increases just like there is in residential real estate. I have a hunch outside of extraordinary events we won't see many loses in any indexes going forward.
