Dow 16,000 is so close. But is it too far?
Less than 400 points separate the Dow Jones Industrial Average from the 16,000 mark. That’s just a 2.5% move on the upside.
However, could that be too much to ask of the index right now?
Though most of the financial industry follows the cap-weighted S&P 500 index (containing 500 of the largest companies), popular media sees the Dow as an indicator of the market. However, the very structure of the Dow index is a major factor in how it moves.
(Related: CNBC’s US Markets coverage)
“The Dow is a peculiar index,” says CNBC contributor Steve Cortes, founder of Veracruz TJM. “With only 30 stocks, individual names or a small group of names can really move this index up or down.”
“And, [the Dow is] price-weighted,” says Talking Numbers host Brian Sullivan, “so one big drop dollar-wise from a big name sends it down. It may mask the real fundamentals of the index”
(Related: Stocks turn higher ahead of close)
Does Cortes believe the Dow will hit 16,000 Read More »from Dow 16,000? Don’t bet on it, say pros