One supply for a 500-point DOW DREYing on Thursday

. Industrial average Dow Jones It fell by about 500 points, i.e. by 1.3%, near Thursday and there was one supply that wore most of the fault: Unitedhealth Group (Unh).

Unitedhealth shares fell by more than 20% after the health insurer reduce the earning forecast throughout the yearciting higher than expected costs. Meanwhile, over two -thirds of 30 shares in Blue Chip Dow, one of the most cited measures of stock market results in the US, was higher. . S&P 500 increased by 0.3% at the same time and NASDAQ composite– usually much more unstable than DO DOW due to its advantage of growth action Yesterday’s sale.

Dramatic worse DOW results on Thursday was a clear reflection of the unique index methodology. There is PriceWhich means that shares with the highest share prices have the greatest impact on the results of the index. On the other hand, S&P 500 and Nasdaq Indexes weighted with capitalization On the more impact of a company with the highest market values, not the highest share prices.

Unitedhealth Group, with the final price of USD 585.04 yesterday, was actions at the highest price in DOW, and thus the most influential component. Goldman Sachs (GS), which was closed yesterday at 499.05 USD, is the only DOWPREEM operation with the price of shares in relation to $ 100 from Unitedhealth’s. (On Thursday with the losses of Unitedhealth Goldman could end the week as the most important dow.)

Apple (Aapl), with a closing price of $ 194.27, has a fraction of Unitedhealth influence in Dow. But the iPhone manufacturer has 15 billion shares, and therefore market capitalization in the amount of almost $ 3 trillion. About 900 million Unitedhealth shares are putting its market capital on Wednesday at 535 billion dollars, which means that Apple shares have over 5 times weight in S&P 500.

Certainly Unitedhealth, 14. As for the size, S&P 500 on Thursday-Wyżucz has a huge impact within the S&P 500.

The selection committee that chooses Dow’s reserves is aware of its numbers. According to S&P Global, his price methodology, “for years meant that DOW did not include exceptionally expensive actions.” Investors often speculate that companies with high stock prices Divide their supplies Partly to increase their chances of joining DO. In recent years, Amazon (Amzz) And Nvidia (NVDA) both have been added to DOW in a relatively short order decomposition their Shares that were commercial in the amount of over USD 1000 per share.

DOW is not the only indicator susceptible to a dangerous imbalance. Early this year Great seven—Apple, Microsoft (MSFT), Nvidia, Amazon, alphabet (Goog), Finish (Finish) and Tesla (Tsla)-measured by about a third S&P 500, extreme concentration level Make the alarm bells of some investors.