America’s Most Famous Stock-Market Measure Is More Broken Than Usual - WSJ

1. The Dow is lagging behind the S&P 500 by over 10%. This reflects outdated index design. 2. Big Tech dominates the S&P 500 but has limited impact on the Dow. Alphabet, Tesla, and Meta are excluded from the Dow. 3. The Dow's price-weighting method skews its representation of market trends. Higher priced stocks influence the index more than market cap. 4. Investors increasingly favor S&P 500 over the Dow for better market representation. The divergence in their movements has grown significantly. 5. A decline in AI stocks could insulate Dow investors. Diversification options are better in equal-weighted S&P ETFs.