John Murray
Handy reminder for new members: before you act on "the market is up," check which index and what's actually in it. Then look at the specific stocks you hold, since an index can rise while your names don't.
Why can the Dow fall on the same day the Nasdaq jumps?
Discussion
On Monday, Oct 19, the Dow Jones Industrial Average closed down 0.07% at 51,966.03, while the S&P 500 rose 0.41% to 7,690.73 and the Nasdaq Composite gained 1.11% to 26,430.89. Same market, same day, three different answers. That's because a stock index is a scoreboard built from its own basket of stocks, and each one keeps score a different way.
The Dow tracks 30 large U.S. companies and is price-weighted, so a stock with a higher share price moves it more than a cheaper one, no matter how big the company is. The S&P 500 covers about 500 large U.S. companies and is weighted by market value (share price times the shares available to trade), so the biggest companies count the most. The Nasdaq Composite holds the thousands of stocks listed on the Nasdaq exchange, also weighted by market value, and it leans heavily toward tech. So on a day like Monday, when the WSJ reported that worries about AI companies overspending had eased, tech's bounce showed up most in the Nasdaq.
So when you hear "the market was up today," ask which index. One number never tells the whole story, and an index rising doesn't mean every stock in it did. Got a question about indexes, or anything else? Ask below, since there are no silly questions here.
The closing numbers come from the Wall Street Journal's Oct 19 market wrap, and the index rules come from S&P Dow Jones Indices and Nasdaq's own methodology pages.