Dow Jones still in the game

THIS year has been a stellar one for US equity markets. Even with the Covid-19 situation still ongoing worldwide, S&P500 is up more than 58 per cent since hitting an intraday low on March 23 2020, while Nasdaq jumped 75 per cent and Dow Jones Industrial Average (DJIA) managed to recover over 52 per cent over the same time period.

However, things do not look the same when comparing year-to-date numbers as Dow Jones was most adversely hit during the market crash from February's peak to March lows. As at Aug 26, S&P500 managed to increase by 7.67 per cent, Nasdaq soared by 30 per cent, while DJIA is still underwater.

However, DJIA is still very much relevant to US equity markets, with many investors still looking to it as a benchmark which made its name since 1926 with 30 component stocks. Being a price-weight index, which allocates the composition of the underlying components based on stock price, Apple's upcoming 4 for 1 stock split might have spurred the index to make some changes. The changes include cloud computing giant Salesforce replacing longtime component Exxon Mobil, Amgen replacing Pfizer and Honeywell replacing Raytheon Technologies.