The plunge in Boeing Co.’s stock isn’t the only reason the Dow Jones Industrial Average is headed lower, but it’s one major reason the index is set to underperform other broad-market barometers.
Boeing’s stock
BA,
sank 7.9% in premarket trading Monday, after the aerospace giant’s 737-9 Max planes were grounded after a panel blew out of an Alaska Air Group Inc.
ALK,
plane over the weekend.
That has put the stock on track to open at a six-week low, on pace to suffer its worst one-day performance since it dropped 8.8% on Oct. 26, 2022, when it announced earnings that fell short of analysts’ expectations.
Also read: Alaska Airlines and United ground their Boeing 737 Max 9 jetliners after in-flight blowout.
The implied price decline ahead of the open would cut about 129 points off the Dow’s
DJIA
price. Dow futures
YM00,
were down 164 points, or 0.4%, while futures
ES00,
for the S&P 500 index
SPX
slipped 0.1% and futures
NQ00,
for the Nasdaq 100
NDX
eased less than 0.1%.
The Dow is a price-weighted index, which means stocks with higher prices have more influence on the index’s price than lower-priced stocks. In contrast, the S&P 500 and Nasdaq indexes are weighted by market capitalization, meaning the more market value the company has, the more influence it has on the indexes’ prices.
Based on Boeing’s stock’s $249.00 closing price on Friday, it is the 10th most influential stock among the Dow’s 30 components. The most influential is UnitedHealth Group Inc.’s stock
UNH,
which closed Friday at $537.38; the stock with the least influence is Walgreens Boots Alliance Inc.
WBA,
which closed at $25.01.
With a market cap of about $150.6 billion as of Friday’s close, Boeing’s stock is the 52nd highest-valued in the S&P 500.
Every $1 move in any Dow stock will move the index by a little less than 7 points. But a 1% move in UnitedHealth’s stock would the Dow by a little more than 35 points, but a 1% move in Walgreens’ stock would have a little less than a 2-point effect. A 1% move in Boeing’s stock moves the Dow a little more than 16 points.
Meanwhile, Alaska Air’s stock is a component of the Dow Jones Transportation Average
DJT,
which like the Dow industrials is also price-weighted, but uses a different calculation. With Alaska Air’s stock down 4.7% ahead of Monday’s open, that would shave about 11 points from the Dow transports’ price.
Shares of Spirit AeroSystems Holdings Inc.
SPR,
tumbled 18.1% in the premarket, but they are not components of the Dow or the S&P 500.
