The S&P 500 and the Dow Jones Industrial Average indices are proxies for the broader US stock market.You notice one day that the S&P 500 closed UP by 0.20%, while the DJIA closed DOWN by 0.20%.
Explain how it is possible for one proxy(S&P 500) to have a positive return while the other (DJIA) has a negative returnon any given day.Include in your explanation some names that could have caused this discrepancy. Which return(S&P 500 or DJIA) is more indicative of the 'true market return'?
Hint: Recall the S&P 500 contains the largest 500 US companies where the weight of each name is proportional to its market value.The DJIA is a price-weighted index comprised of select 30 names representing certain industries.(15 points)
Mod 1 Homework_S&P500 & Dow Jones Index Data Q ~ Search Sheet Home Insert Draw Page Layout Formulas Data Review View X Cut + Share Calibri (Body) * 11 A- A- E Wrap Text General 2 AutoSum Paste Format |Merge & Center $ ~ % 2 60 $.0 Conditional Format Fill Cell Insert Delete Format Sort & N30 4X v fx Formatting as Table Styles Clear s&P 500 Index Composition as of 4/20/2020 G H M Dow Jones Industrial Average Composition as of 4/20/2020 N 0 Company Index Wt. Microsoft Corp Mkt Cap ($bil) 5.26% $1,347 Company Index Wt. Mkt Cap ($bil) i Apple, Inc. 4.90% UnitedHealth Group $283 Amazon.com, Inc. 4.69% $1,254 Apple 1,199 8.00% 1,254 ! Home Depot 5.93% $215 5 Alphabet, Inc 3.39% $868 McDonalds 6 Facebook, Inc. 3.38% $864 5.27% Goldman Sachs $133 $502 5.19% $61 Berkshire Hathaway, Inc Microsoft 10 8 Johnson & Johnson 1.79% 5.05% $1,347 $457 9 Walmart, Inc. 1.54% $395 4.80% Boeing $319 10 Visa, Inc. 1.46% $375 9 4.36% $76 1.25% Johnson & Johnson 4.30% $319 $395 1 13 11 Procter & Gamble Co. 10 3M $300 11 4.14% $83 14 United Health Group, Inc 13 JPMorgan Chase & Co. 1.11% Walmart 3.74% 1.04% 5283 12 Procter & Gamble $375 $266 13 3.53% $300 16 17 14 Intel Corp. IBM 15 Mastercard, Inc. 1.02% $260 14 $103 3.29% $62 18 16 Verizon Communications, Inc. 0.97% $248 15 0.93% Disney $239 16 3.029 $184 19 17 AT&T, Inc. 20 18 The Home Depot, Inc. 0.85% $216 0.84% $215 17 Travelers 2.97% $25 JPMorgan Chase $266 21 19 Merck & Co., Inc. 18 2.69% 2.546 22 20 The Coca-cola Co. $210 19 0.79% American Express 23 21 Pfizer Inc. $202 20 2.47% $66 Chevron 21 $149 22 Netflix, Inc. $199 2.47% Merck 25 23 PepsiCo, Inc. 0.75% 0.74%% $193 $188 22 2.36% $210 Raytheon Technologie 26 24 Bank of America Corp. 23 1.87% $33 Intel $260 27 | 25 The Walt Disney Co. 0.73% $187 0.72% $184 24 Verizon Communications 25 1.65% $239 28 26 NVIDIA Corp. Coca-Cola 1.36% $202 29 27 Cisco Systems, Inc. 0.71% $180 26 Walgreens Boots Alliance 28 Comcast Corp $176 1.26% $38 30 0.69% D.67% 27 ExxonMobil 1.22% 31 29 Oracle Corp. $172 $166 0.66% 28 Cisco Systems 32 30 Abbott Laboratories $169 0.66% 29 $169 30 1.04% 33 1 31 Exxon Mobil Corp. Dow 0.65% $166 0.95% $199 $23 35 Adobe, Inc. 33 Chevron Corp 0.65% $165 36 1 34 Eli Lilly & Co. 0.58% $149 0.58% 37 35 Costco Wholesale Corp. 39 38 36 salesforce.com, inc. 0.55% $148 $142 Amgen, Inc. 0.55% $141 40 38 Bristol-Myers Squibb Co. 0.53% $136 41 39 NIKE, Inc. 0.53% $135 0.52%% 42 | 40 Mcdonald's Corp. 43 0.52% $134 41 Thermo Fisher Scientific, Inc. $133 0.51% $130 S&P & DJIA + Select destination and press ENTER or choose Paste + 100%
