Dow Jones Today up as Tech Stocks Jump
The Dow Jones Industrial Average was up 121, to 16,398, at 1:45 p.m. EDT after some mixed reports on the economy. The tech sector was on the rise after yesterday's fall. The S&P 500 was up 10 points to 1,867.
Twenty-three of 30 Dow stocks were positive for the day. IBM , as the second largest Dow stock by weight at 7.5%, is leading the blue-chip index higher today with its 3.5% rise to $194.87. IBM's stock has had a tough year, down 9% from a year ago compared to a 13% rise for the Dow Jones, a 22-percentage point difference that developed as the company missed analyst expectations multiple times in 2013. The shares trade near a three-year low price-to-earnings ratio of 13. One investor who has been taking advantage of IBM's relative weakness is Warren Buffett, who continues to add to his stake in IBM.
The other Dow tech stock up for the day is Cisco , which has risen 3% to $22.22. While Cisco is today's second-best performing Dow stock, the network specialist has the lowest stock price on the Dow. As the Dow Jones is a price-weighted index, a relic of its old age, Cisco has the lowest weight among the 30 Dow stocks. Cisco's weight is just 0.85% even though its market cap is $113 billion. Visa, with its stock price of $220, has a weight eight times that of Cisco even though its market cap is not hugely different -- $139 billion.
It's for this reason and others that I have called the Dow Jones Industrial Average useless. You would be better off if you stopped paying attention to the Dow and stock market news in general, and focused on what's important for your investing strategy.
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Dan Dzombakcan be found on Twitter @DanDzombakor on his Facebook page,DanDzombak. He shares of Cisco Systems. The Motley Fool recommends Cisco Systems. The Motley Fool owns shares of International Business Machines. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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