The Dow Industrial Average was the best of the worst major US indices in 2022.
For the year, the major indices are indices Stock market indices represent an index that measures a specific stock market or segment of the stock market. These tools are important investors as they help compare current price levels to past prices to calculate market performance. The two most important parameters for indices are that they are both investable and transparent. For example, investors can invest in a stock market index by purchasing an index fund structured as either a mutual fund or an exchange traded fund and tracking an index. The difference between an index fund’s performance and the index, if any, is called the tracking error. Most major countries have multiple indices. Commonly traded indices include the S&P 500, NASDAQ-100, Dow Jones Industrial Average (DIJA), EURO STOXX 50, Hang Seng Index and many more. Stock market indices can be characterized or segmented by index coverage of stocks. The aggregate coverage of an index represents an underlying group of stocks, most commonly grouped according to underlying investor demand. Trading Indices Retail brokers provide exposure to indices through the use of contracts for difference (CFDs) or exchange-traded funds (ETFs). . Both are popular methods of trading certain markets and are almost always offered by most brokers. Investors can choose between several types of indices, which traditionally fall into several categories. This includes country coverage, regional coverage, global coverage, exchange-based coverage, and sector-based coverage. All indices are ultimately weighted in different ways. The most common mechanisms include market cap weights, free float-adjusted market cap weights, volatility weights, price weights, and others. Stock market indices represent an index that measures a specific stock market or segment of the stock market. These tools are important investors as they help compare current price levels to past prices to calculate market performance. The two most important parameters for indices are that they are both investable and transparent. For example, investors can invest in a stock market index by purchasing an index fund structured as either a mutual fund or an exchange traded fund and tracking an index. The difference between an index fund’s performance and the index, if any, is called the tracking error. Most major countries have multiple indices. Commonly traded indices include the S&P 500, NASDAQ-100, Dow Jones Industrial Average (DIJA), EURO STOXX 50, Hang Seng Index and many more. Stock market indices can be characterized or segmented by index coverage of stocks. The aggregate coverage of an index represents an underlying group of stocks, most commonly grouped according to underlying investor demand. Trading Indices Retail brokers provide exposure to indices through the use of contracts for difference (CFDs) or exchange-traded funds (ETFs). . Both are popular methods of trading certain markets and are almost always offered by most brokers. Investors can choose between several types of indices, which traditionally fall into several categories. This includes country coverage, regional coverage, global coverage, exchange-based coverage, and sector-based coverage. All indices are ultimately weighted in different ways. The most common mechanisms include market cap weights, free float-adjusted market cap weights, volatility weights, price weights, and others. Read this term displayed:
- The Dow industrial average fell -8.78%
- S&P Index down -19.44%
- Nasdaq NASDAQ The Nasdaq Stock Market or NASDAQ is an American stock exchange. It trails only the New York Stock Exchange (NYSE) in market capitalization and is part of a network of stock markets and options exchanges. Founded in 1971, NASDAQ is the acronym for the National Association of Securities Dealers Automated Quotations. It has since been known simply as NASDAQ and has grown to become one of the most influential exchanges in the world. The NASDAQ was the world’s first electronic stock market and has since taken over the majority of large trades that were previously executed over the counter (OTC) trading system. What makes the NASDAQ different? Notably, the exchange also offers the NASDAQ Composite, which includes almost all stocks listed on the NASDAQ exchange. Along with the Dow Jones Industrial Average (DIJA) and the S&P 500 Index, this is one of the top three most visited stock market indices in the United States. Overall, the NASDAQ stock market has three distinct market tiers. This includes the capital market, or a stock market for companies with relatively small market capitalizations. Listing requirements for small-cap companies are less stringent than other Nasdaq markets, which list larger companies with significantly larger market capitalizations. In addition, the Global Market consists of stocks representing the Nasdaq Global Market. The Global Market consists of 1,450 stocks that meet the stock market’s financial and liquidity requirements and corporate governance standards. Finally, the Global Select Market is a market capitalization-weighted index composed of 1,200 US-based and international stocks representing the Global Select Market. The Nasdaq Stock Market or NASDAQ is an American stock exchange. It trails only the New York Stock Exchange (NYSE) in market capitalization and is part of a network of stock markets and options exchanges. Founded in 1971, NASDAQ is the acronym for the National Association of Securities Dealers Automated Quotations. It has since been known simply as NASDAQ and has grown to become one of the most influential exchanges in the world. The NASDAQ was the world’s first electronic stock market and has since taken over the majority of large trades that were previously executed over the counter (OTC) trading system. What makes the NASDAQ different? Notably, the exchange also offers the NASDAQ Composite, which includes almost all stocks listed on the NASDAQ exchange. Along with the Dow Jones Industrial Average (DIJA) and the S&P 500 Index, this is one of the top three most visited stock market indices in the United States. Overall, the NASDAQ stock market has three distinct market tiers. This includes the capital market, or a stock market for companies with relatively small market capitalizations. Listing requirements for small-cap companies are less stringent than other Nasdaq markets, which list larger companies with significantly larger market capitalizations. In addition, the Global Market consists of stocks representing the Nasdaq Global Market. The Global Market consists of 1,450 stocks that meet the stock market’s financial and liquidity requirements and corporate governance standards. Finally, the Global Select Market is a market capitalization-weighted index composed of 1,200 US-based and international stocks representing the Global Select Market. Read this term index fell -33.10%
- Russell 2000 down -21.55%
Which Stocks in the Dow 30 Tempered the Declines in 2022?
The chart below shows the percentage gains and losses of the major stocks in the Dow Industrial average. There were a total of 10 stocks that posted gains for the year, led by Chevron, which gained 52.95%. The biggest loser was Intel, which fell -48.68%. A total of 11 stocks fell over 20%, including Apple (down -26.83%), Microsoft (-28.69%), Disney (-43.88%).
The % YoY changes for the Dow 30 in 2022
The latest addition to the Dow, Salesforce, plunged -47.83%. Salesforce was added on August 31, 2020, replacing Exxon Mobile. Exxon Mobile was one of the strongest stocks in 2022, up 80.26%. Since Aug. 31, 2020, when Exxon Mobile was knocked out of the Dow 30, the stock is up 176%.
How has Salesforce performed over the same period?
Saleforce shares are down -51.3% since their inclusion in the Dow 30.
I wonder how the math would have worked out for the Dow if this switch hadn’t happened? Would the Dow have posted a gain in 2022?
Looking at the broader S&P index, the S&P escaped a 20% decline in 2022, but only just. The S&P fell -19.44% year-on-year, the biggest drop since 2008 when the index fell -38.49%.
That year’s decline was the fourth-worst since 1974. What’s worth noting, however, is that after each sharp year of decline, the next year saw a sharp rise
- In 1974 the index fell by -29.74%. In 1975 the index increased by 31.55%
- In 2002, the index fell by -23.37%. In 2003 the index increased by 26.38%
- In 2008, the index fell by -38.49%. In 2008 the index increased by 23.45%
Something to think about in 2023.
Looking at the 11 components of the S&P index, the only winner was the energy component, up 59.04%. Communications and Consumer Discretionary were the worst performers, falling -40.42% and -37.58% respectively.
The gains and losses for the 11 S&P components in 2022
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