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Why we care so much about the Dow, the stock market's dumbest index

·1 min

The Dow Jones Industrial Average, while imperfect, persists as a way to gauge stock market activity for large US companies. On Thursday, the Dow reached 40,000, grabbing headlines and conveying a positive outlook. The Dow is commonly associated with the stock market, although it does not represent the thousands of listed stocks. Despite being outdated, the Dow’s longevity makes it a historical record of the US economy. Unlike the S&P 500, the Dow ranks companies by share price rather than market capitalization, which can lead to unusual rankings. Despite its flaws, the Dow remains a significant and recognizable barometer of Wall Street.