WHY HAS THE DOW JONES INDUSTRIAL AVERAGE BEEN RISING?

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As with every Dow milestone, detractors were quick to dismiss the news, claiming that round numbers aren’t significant and that the Dow is somehow inferior to market-cap-weighted indexes like the S&P 500 (GSPC) since it is a price-weighted index.

However, the Dow and its landmarks have a tonne of value and importance, and investors may learn a thing or two from them about investing.

The Dow has the same high turnover rate as the S&P 500, which is one distinguishing feature. In actuality, there are no longer any of the original 12-component Dow from 1896. The final founding member, General Electric (GE), was replaced in 2018. When it was ultimately replaced in August, ExxonMobil (XOM), which was a member of the Dow when it became a 30-component index in 1928, was the oldest Dow component.

These market indexes’ upward trend can be attributed to this turnover. The committees in charge of these indexes frequently swap out names for new ones that are more relevant to the current state of the economy, along with old business models.



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