Critics argue the Dow no longer reflects the modern economy

The Dow Jones Industrial Average vs. the S&P 500: Which one is a better representation of the economy?

The Dow and S&P 500 are both indexes meant to provide a broad representation of the economy. The Dow has 30 companies and is weighted by share price, while the S&P 500 has 500 different companies weighted by market capitalization. Since the indexes are so different, investors don't always agree on which index is a better representation of the economy—though the two move in the same direction more than 90% of the time.

The Dow’s price-weighted formula makes stock price matter more than size

Unlike most indices, which weigh companies by market value, the DJIA is price-weighted—meaning higher-priced stocks have more influence on its movements. As a result, a company’s share price matters more than its overall size.

The Dow now tracks 30 major US companies across various industries

Since 1928, the DJIA has included 30 firms. Today's group spans technology, healthcare, and finance—with Apple, Microsoft, JPMorgan Chase, Pfizer, and Coca-Cola among its most recognized components.

The Dow remains a shorthand for America’s economic health

For over a century, the Dow Jones Industrial Average has been one of the most closely watched market barometers. Its rises and falls dominate headlines and politics, shaping how Americans perceive the strength of their economy.

Dow components are chosen by a committee, not a formula

Unlike many indices, the Dow has no strict rules for inclusion. A small committee at S&P Dow Jones Indices uses judgment—favoring companies with strong reputations, steady growth, and broad investor interest.

The Dow Divisor keeps the index consistent through time

To adjust for stock splits, mergers, and replacements, the DJIA uses a figure called the Dow Divisor. Originally valued around 12 in 1896, and now less than one, it ensures today’s index levels remain comparable with the past.

The Dow Jones Industrial Average was created in 1896

Charles Dow introduced the DJIA on May 26, 1896, as a simple average of 12 industrial stocks. Although it became the nation’s most enduring market index, none of its original companies remain in the Dow today.

The Dow Jones Industrial Average is a stock market index

The Dow Jones Industrial Average tracks 30 large U.S. companies from all major U.S. sectors except for utilities and transportation. It's considered a bellwether of the U.S. economy.

Even iconic companies can get dropped from the Dow

The Dow’s lineup evolves as the economy changes. General Electric, part of the original 1896 index, was removed in 2018, after 122 years. ExxonMobil, once the world’s largest company, was replaced by Salesforce in 2020.

See every company in and out of the Dow since 1928

The index has had 30 companies since 1928. See each company’s tenure on the index and what firms were added or replaced by year and industry.

In late 2025, the top 10 companies in the S&P 500 made up more than 40% of the index's total value

This raised concerns for investors about the index's risk exposure. As many large tech companies continued posting record highs, analysts argued that the top-heavy index was becoming less representative of the economy as a whole.

GE’s removal marked the end of an era for the Dow

General Electric, the last surviving original Dow component, was dropped in 2018, after years of decline. Its exit symbolized the fading dominance of industrial giants and the index’s shift toward technology and healthcare.

Some argue that the S&P 500 is actually an actively managed index

Some critics of the S&P 500's selection process argue that human involvement makes it an actively managed index. S&P Global maintains that while a human selects the stocks in the index, those decisions are not made with the intent of maximizing performance, but rather, to provide a snapshot of the largest companies across different industries.

Dow Theory laid the groundwork for modern market analysis

Developed by Charles Dow in the late 19th century, Dow Theory argued that markets move in trends. Its principles—confirmation, trends and volume—still influence technical analysis today.

Ray Dalio has argued that American capitalism is broken, citing economic factors like a growing wealth divide

Dalio also points to stalling income growth, weak healthcare systems, and poor educational outcomes when arguing that American capitalism needs serious reform. However, critics point out that Dalio has amassed a large fortune by running the world's largest hedge fund and question whether Dalio really wants economic reform.

Before the S&P 500 launched in 1957, Standard and Poor's had a daily index with just 90 companies

Unlike previous indexes from S&P, the S&P 500 could be computed in real time using computer technology that tracked stock tickers across stock exchanges. This innovation is partly what led to 500 companies being listed on the index, a huge increase from the 90 companies in S&P's flagship index when the company had to do all the analysis by hand.

Relive the biggest swings in the Dow’s history

From the 1929 crash to the Coronavirus Pandemic in 2020, this piece spotlights five of the most dramatic single-day moves in the Dow’s 125-year history.

Some critics say comparing chart rankings across decades is meaningless

Although Billboard’s charts are presented as objective measures of a given song’s popularity, the company’s changing methodology (alongside changes in technology and listener habits) has made weighing chart success from different eras an imperfect science.

In 1999, Microsoft and Intel’s addition signaled the information tech era for the Dow

Microsoft and Intel became the first information technology firms added to the DJIA. Their inclusion marked a turning point—the digital revolution and tech began to drive the American economy.

Critics say that the Electoral College is outdated and favors small states

This article argues that the Electoral College no longer reflects modern democratic norms, disproportionately advantages smaller states, and warrants broader reform and national debate. (Some readers may experience a paywall.)

The number of publicly traded companies has decreased in recent years.

In 1996, more than 7,300 companies traded publicly on US stock markets, but that number has recently dropped to 4,300. Economists point to two reasons: First, going public requires full disclosure of operations, exposing it to scrutiny from investors, competitors, and analysts. Second, the IPO process is expensive and time-consuming.

Visualizing decades of stock market performance

Stock markets and the indexes that track their biggest companies tend to ebb and flow, with long growth periods punctuated by shorter recessions. Track the 60-year history of one of the most common stock market indexes, the S&P 500, with this data visualization. The chart highlights the long-term durability of markets despite appearance of short-term volatility.

Read about the 'gatekeeper' of the stock market, former index chair at S&P Global

David Blitzer, the former index chair at S&P Global, earned the nickname "gatekeeper" of the stock market after helping decide which companies made it into the S&P 500 for 24 years. Blitzer became a legend in the world of indexing and has a reputation for being even-tempered and always wearing a bow tie.

Some institutional investors are growing wary of private equity, as certain investments underperform traditional market indices

Private equity often attracts investors who can afford to tie up capital for long periods of time in exchange for higher returns than traditional investments. For many years, private equity at least tracked with the S&P 500 in terms of returns to investors, but in 2024 and 2025, it underperformed and posted declining returns.

Visualize the differences between the NYSE and the Nasdaq

The two largest stock exchanges in the world by market cap of their listed companies have many key differences, including the number of companies listed on each exchange (the NYSE has fewer companies than the Nasdaq), their perceived volatility (the Nasdaq is perceived as more volatile), and more.

Arguments for returning to a gold standard reappear from time to time

However, critics argue that globalization has made the gold standard impractical for modern economies, as it limits a nation’s ability to have a flexible monetary policy—hence, none of today's governments have a gold standard.

Why does the stock market matter?

Open any newspaper, turn on your local TV news station, or listen to a daily business radio segment, and you’re bound to hear about how the stock market is performing. Netflix created a 17-minute (free) explainer that dives deep into the nitty-gritty of how we got here.

Critics say Nobel Prizes need updating to reflect how science and society work today

The rules still favor individuals over teams and may reflect outdated views on who does science. In 2013, the Nobel Prize in physics went to two theorists, even though over 5,000 scientists helped confirm the Higgs boson.

Some critics argue bebop and free jazz led to jazz's decline in popularity

Although jazz was once a popular art form, it has largely been confined to the margins of pop culture, with many of the genre's current bestselling albums from previous decades. Some critics argue that this is because the music betrayed its position as dance music and focused instead on musical proficiency.

'Planet Money' debates the financial indicators that defined 2025

In this end-of-year episode, "Planet Money" stages a playful debate over which economic indicators best captured the chaos of 2025—from tariffs to AI bubbles—and which signals may matter most as the US economy heads into 2026.

Critics believe Grammy expert panels primarily benefit legacy artists

When the expert review panels for the Big Four awards were disbanded, it was with the hope that the decision would lead to a broader range of nominees and winners. But, in practice, it's not clear that it's playing out that way.

Some economists argue the national debt is not a critical concern

The US has the largest national debt and one of the highest debt-to-GDP ratios. These vitals have long been considered a sign of poor fiscal health, but economists are beginning to shift their attention to interest rates to evaluate national debt.

Many economists see Black Friday as a litmus test for consumer confidence

Some investors and analysts look at Black Friday’s sales numbers as a way to gauge the overall health of the retail industry—and consumer confidence at large. However, others don’t believe Black Friday results have a particularly significant impact on markets, arguing that the figures only cause short-term gains or losses.

The 60/40 method says to allocate 60% of your portfolio to stocks, and 40% to bonds

The 60/40 method used to be the golden rule when planning for retirement, as stocks are more lucrative and bonds are more reliable. However, it isn’t necessarily the go-to recommendation anymore.

Some argue that credit reporting promotes economic inequality in the US

Although today's credit scoring system is much more objective than, say, the credit assessment system of the 1700s, some argue there's still room for improvement, with critics saying the current system is still discriminatory. For example, while mortgage payments have long been automatically reported to credit bureaus, rent payments (the primary housing expense for most lower-income Americans) historically haven't been reported unless a payment was missed.

Why diners and chefs are ditching the Michelin Guide

The Michelin Guide's influence appears to be waning, indicating a shift in the perception of fine dining in contemporary culture. Trends show that diners today prefer getting recommendations from more informal networks, especially after lackluster experiences at Michelin-rated restaurants. Some chefs claim the star ratings don’t significantly influence their business, and others reject the pressure of obtaining a Michelin star altogether. Read more about the shift in this article.

Hear why one author thinks college rankings may be irrelevant

For more than three decades, US News & World Report has released an annual ranking of the country's best colleges. An extremely influential list that can determine application volume, funding decisions, and more, the rankings have been compiled by a secret algorithm indecipherable to many on the opposite side of the table. Author Malcolm Gladwell attempts to unpack the calculation, ultimately raising the question: How relevant is the list?

The World Bank, IMF, and WTO all face calls for structural reform

Researchers argue that all three major institutions face legitimacy and effectiveness challenges, including outdated governance structures, unequal voting power, and difficulty adapting to a more multipolar world.

Retail investors are not professionals—they invest their own money

For retail investors, the stakes may seem higher and more personal. Critics say that this dynamic means that retail investors are more susceptible to behavioral biases that could lead them to make poor decisions when it comes to buying and selling assets. For instance, fear of missing out could cause a retail investor to buy a stock that is popular but not a financially worthy investment.

Meet the ‘SPY kids’ tied to Wall Street’s first ETF

When SPY became the first ETF to launch in 1993, regulators wanted its issuers to set a termination date. After initially saying the fund would cease to exist in 25 years, its issuers came up with a different strategy. They named 11 children born between 1990 and 1993 and declared that the fund would cease to exist in 2118, or 20 years after the last of the 11 “SPY kids” died. The kicker? According to Bloomberg, none of the children knew they were connected to the fate of this giant fund.

How the stock market performed under every US president

It's worth noting that the stock market as we know it today didn't exist under the leadership of earlier presidents, such as George Washington and Thomas Jefferson.

Researchers, experts, and retirees are finding that the 401(k) has left much to be desired

Baby Boomers, once the biggest generation, are now creating the largest wave of retirees in US history. Much of this generation is also the first to retire predominantly on the expectation that their 401(k) plans or similar tax-advantaged accounts performed well in the markets—which isn’t always the case.

Market concentration and high markups don't always signal a monopoly

When regulators and economists evaluate whether a company constitutes an illegal monopoly, they often consider its overall market share or its relatively high price markups. This piece argues that the Olley-Pakes decomposition is a better measure, identifying whether customers within a market are switching to more productive companies.

Explore America’s top companies by revenue in 1994 versus 2023

America’s top companies by revenue have changed a lot in the past few decades. Sears, for instance, isn’t on the 2023 list, while Amazon isn’t in the 1994 edition.

The K-pop industry's Big Four are facing declining stock prices

The major players of the K-pop industry—SM, JYP, YG, and HYBE—are publicly listed companies. Despite huge financial successes, these corporations have recently dealt with plunging stock prices, losing between 29% and 56% of their market cap by late 2024. While there’s no one reason for the recent devaluation, there are signs of slowing enthusiasm and less action from the major players—BTS and Blackpink.

It has historically been tough for minorities to rise through the ranks in investment banking

According to a Barron’s article, only about 1.3% of the $69T asset management business is managed by firms led by women or minorities—even if their performance is comparable to those led by white men.

Visualizing the world's wealth in 2019

The world has a net worth of $360T. The U.S. economy continues to dominate given its sheer size, Asia and Europe are not that far behind.

Disney’s IP problem, according to industry experts

Disney seems to be an unstoppable force in the entertainment industry, but after an unprecedented high point in 2019, the company began losing money. In this podcast, two industry veterans discuss what they see as Disney's existential problems: an overreliance on preexisting material and an inability to innovate as it once did.

Read about why bans on short selling are a controversial policy

Generally, short selling is legal, but regulations often restrict short positions when a stock has experienced a sharp price decline (more than 10% in one day). However, negative feedback loops in times of financial crisis have given short selling a bad reputation. The government has temporarily banned short selling during previous market downturns—like The Great Recession of 2008 and the early months of the COVID-19 pandemic—but experts argue whether those bans actually improved market stability or just distorted prices.

Experts don’t believe upbeat tunes, called ‘recession pop,’ are legitimate recession indicators

Social media users have begun deeming pop music by the likes of Kesha and Katy Perry a “recession indicator” as they try to predict the next economic downturn.