The persistence of the DOW as the Headline index is just weird

[cthulu2016]

It isn't obvious how keeping the Dow Jones Index of 30 industrial stocks (which are mostly no longer even industrial) as the "headline" stock index benefits some shadowy big money entity... It may just be one of those irrational things without a good explanation other than "because that is how it has always been."

Back in the day the Dow was considered a useful indicator of stocks that had a lot to do with the current and future strength of the economy and of employment,or an index of the blue chips that most market players traded in.

But today, the average investor watching the news is directly invested in the movement of the S&P Index of 500 large cap stacks itself, via a mutual fund, while few people are directly invested in the movements of the DJ30.

Never has any index been as important to so many people as the SP500. And being a broad index of big-cap stocks, everyone thinks of it as the best single indicator of market strength or health.

So, of course, in the news we still report the DOW first as *the* headline marker for how the market is doing.

[whatthehey]

1. tradition and continuity

S&P, Russell etc make more sense, but lack anywhere near as wide a recognition of historical norms and turning points. People who pay even scant attention to financial news probably remember the DJIA going down to <6600 in the recent recession, but few non-enthusiasts are likely to get the S&P right. I trade relatively actively and I'd be a bit hazy myself. 745 or so? Russell? I wouldn't embarrass myself by guessing.

They all correlate fairly well anyway, or at least have recently.

[IronLionZion]

2. I've wondered that myself

I think a lot of folks also don't know that the DOW is only 30 companies.

I completely ignore the dow and look at S&P 500 and NASDAQ composite.

S&P is so important that when a component joins or leaves, the many index mutual funds buying or selling it will cause significant influence in market prices.