Microsoft Lifts Dow 1% for Week as Nasdaq Slides 4%

Q: With Alphabet joining the Dow, will the 'old economy' index become another victim of tech's wild swings?

Not necessarily, but Alphabet’s arrival will make the Dow more sensitive to tech than it has been. The key change is structural. The Dow is price-weighted, so a high-priced stock matters more than a lower-priced one regardless of market value. Alphabet is replacing Verizon, whose low share price had little effect on the index. With Alphabet expected to carry roughly a 4% weight, its day-to-day moves will have a much bigger impact than Verizon’s ever did. That said, the Dow is still less exposed to tech swings than the Nasdaq or even the S&P 500. It holds only 30 stocks, but they span multiple sectors, and its recent resilience came partly from having less chip exposure during the latest AI-driven selloff. This week showed that clearly: the Dow rose 1% while the Nasdaq fell 4%. Even within the Dow, non-tech names such as Caterpillar and Goldman Sachs were large enough to nearly offset Microsoft’s strong gain. Alphabet’s addition does continue a broader shift. With Microsoft, Apple, Nvidia, Salesforce, Cisco, Amazon and now Alphabet, the index is becoming less of a pure “old economy” gauge and more reflective of the modern U.S. economy. That means more exposure to AI, digital advertising and cloud-related sentiment, all of which can be volatile. So the Dow is unlikely to become another Nasdaq-style casualty of tech’s wild swings, but it will lose some of the insulation that once set it apart.

3 articles · Updated · The Motley Fool · Jun 26

Microsoft jumped 4.9% Friday, adding 107 Dow points and about $136 billion in market value, helping keep the Dow up 1% for the week while the Nasdaq sank 4%.
Caterpillar fell 4.1% and Goldman Sachs lost 2.8%, stripping 452 Dow points combined and showing how much the index relied on Microsoft to stay positive.
Brent crude slid to about $73 a barrel, pushing the U.S. Oil Fund down 4.1% as traders bet more Iranian oil will return; 62 ships transited the Strait in 24 hours, still half normal traffic.
Gold also rose 1.6%, signaling investors still want safe havens even as oil retreats and some market stress from the Middle East eases only slowly.
The week ended with the S&P 500 down 1.5% and a sharp tech selloff dominating sentiment, while Alphabet's entry into the Dow next week is set to raise the index's tech weighting.