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Stock Market Crash Sees Dow Jones Components Trade Places

Stock Market Crash Sees Dow Jones Components Trade Places

2020-03-12 21:30:00
Peter Hanks, Analyst

Dow Jones Price Forecast:

  • The Dow Jones crashed more than 10% on Thursday posting its largest daily loss since 1987
  • Boeing’s struggles look set to continue as the aerospace manufacturer slips down the Dow Jones
  • Meanwhile, volatility may continue in the days ahead as the world’s largest economy begins to slow as a byproduct of coronavirus containment procedures

Stock Market Crash Sees Dow Jones Components Trade Places

The Dow Jones plummeted more than -10% on Thursday despite unprecedented measures from the Federal Reserve. Elsewhere, European indexes suffered double-digit losses which saw many of the markets suffer their worst daily decline since 1987. As a result, the Dow Jones saw a dramatic shift in weighting toward the top of the index as some of the unique catalysts of the crash pressure certain sectors more than others.

dow jones price chart and components

Chart created with TradingView

To that end, the combined headwind from Boeing’s 737 Max issues and the monumental hit to the travel industry have worked to undermine the plane-maker’s weighting on the Industrial Average. Up until mid-February, Boeing possessed the single-most influence over the index, a title it held since early 2017. Now, BA has fallen to fifth on the weighting list, losing out to a number of other household names.

On the other hand, United Healthcare Group appears to be the biggest winner thus far. Enjoying a modest boost from a shift in the Democratic primaries and the relatively lower beta of sector, UNH has reclaimed the top step on the podium after along absence.

dow jones weighting components

Apple, Home Depot and McDonalds also leapfrogged the Chicago-based company amid the recent rout as the DJIA experiences a dramatic and abrupt weighting reshuffle. While it may not be headline-grabbing news, the subtleties of the index’s weighting can have a notable influence on price in the future and the shift serves to illustrate some of the driving concerns behind the current stock market crash.

What Markets are Rising as the Dow Jones and Crude Oil Collapse?

Should equity losses continue, stocks like Boeing, Apple and Microsoft may fall further down the ladder while more defensive sectors like Healthcare enjoy relative outperformance. In turn, the Dow Jones could effectively become more defensively-natured itself. That being said, price action across a variety of asset classes would suggest no stock is safe from the current market collapse, only that companies with undue exposure may continue to underperform.

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--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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