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The Dow’s big drop on Tuesday was worsened by some of its most important stocks.
The blue-chip index fell 375 points, or 0.8%, in Tuesday trading. The S&P 500 was down 0.4%. The Nasdaq Composite was off 0.5%. The Dow’s decline was double the S&P 500’s because of how it weighs its members.
The Dow is a stock-price weighted index. That means instead of the largest companies having the most weight in the Dow like the S&P, it gives weight to larger stock prices. It’s a fairly arbitrary and anachronistic way to weigh stocks, which explains why the S&P 500 serves as a stronger market benchmark.