Why Are the S&P 500 and Dow 30 Different?

The S&P 500 and Dow 30 are two of the most followed stock market indices in the world. So, when the two indices move in different directions, it can create a lot of confusion for investors. Truth be told, it’s like watching your favorite sports team play against two different opponents: you’re not sure who to root for! In this article, we’ll explain why the S&P 500 and Dow 30 are different, and why they sometimes move differently.

The S&P 500 vs. the Dow 30

The S&P 500 is a capitalization-weighted index of the 500 largest publicly traded companies in the United States. This means that that the larger a company’s market capitalization, the more influence it has on the index. The Dow 30, on the other hand, is a price-weighted index of 30 large companies that are listed on the New York Stock Exchange.

Key Differences

Here are the key differences between the S&P 500 and Dow 30:

Feature	S&P 500	Dow 30
Number of companies	500	30
Weighting	Capitalization-weighted	Price-weighted
Companies included	Largest 500 publicly traded companies in the US	30 large companies listed on the New York Stock Exchange

Why They Sometimes Move Differently

Despite their similarities, the S&P 500 and Dow 30 can sometimes move differently. This is because the two indices are constructed differently -and hence are susceptible to different factors. For example, the S&P 500 is more heavily influenced by large-cap stocks, such as Apple and Microsoft. The Dow 30, on the other hand, is more heavily influenced by blue-chip stocks, such as Boeing and Coca-Cola.

Which Index is Better?

There is no easy answer to the question of which index is better. The S&P 500 is more representative of the overall U.S. stock market, while the Dow 30 is a more traditional index that has been around for a shorter period of time. Ultimately, the best index for you will depend on your personal investment goals and risk tolerance.

Which Companies Are in the S&P 500 and Dow 30?

Here are the top 10 companies in the S&P 500 and Dow 30, as of January 2023:

S&P 500

Rank	Company	Ticker	Market Cap ($)
1	Apple	AAPL	$2.65 trillion
2	Microsoft	MSFT	$1.91 trillion
3	Amazon	AMZN	$879 billion
4	Alphabet	GOOGL	$871 billion
5	Tesla	TSLA	$595 billion
6	Berkshire Hathaway	BRK.A	$582 billion
7	UnitedHealth Group	UNH	$469 billion
8	Johnson & Johnson	JNJ	$464 billion
9	ExxonMobil	XOM	$372 billion
10	Chevron	CVX	$352 billion

Dow 30

Rank	Company	Ticker	Market Cap ($)
1	UnitedHealth Group	UNH	$469 billion
2	Apple	AAPL	$2.65 trillion
3	Microsoft	MSFT	$1.91 trillion
4	Visa	V	$502 billion
5	Goldman Sachs	GS	$118 billion
6	Merck	MRK	$229 billion
7	Nike	NKE	$194 billion
8	Amgen	AMGN	$203 billion
9	Coca-Cola	KO	$264 billion
10	Chevron	CVX	$352 billion

The S&P 500 and Dow 30 are two of the most important stock market indices in the world. While they are similar in many ways, they also have some key differences. These differences can lead to the two indices moving differently from time to time. Ultimately, the best index for you will depend on your personal investment goals and risk tolerance.

Questions and Discussion

What are the biggest differences between the S&P 500 and Dow 30?

Why do you think the S&P 500 and Dow 30 sometimes move differently?

Which index do you think is a better representation of the overall U.S. stock market?

Which index are you more likely to invest in?