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March Madness and the DJIA – Winners & Losers Thumbnail

March Madness and the DJIA – Winners & Losers

Economy Investments

Relying solely on past performance to predict the future is a risky strategy

 

Newspapers, radio, and TV news programs frequently reference the Dow Jones Industrial Average (DJIA), often calling it the Dow or the Dow Jones. Economists and financial advisors closely monitor its daily fluctuations and long-term trends. But what exactly is the Dow Jones Industrial Average, does it really matter, and can one observe performance patterns from year to year? 

A Brief History

The Dow Jones Industrial Average is a stock market index used to gauge the overall performance and health of the stock market. Established in 1896 by Charles Dow, co-founder of Dow Jones & Company and editor of The Wall Street Journal, it serves as a barometer for the U.S. economy.

The DJIA tracks the market performance of 30 large American companies. Initially, it comprised 12 stocks, including companies like American Cotton Oil Company, U.S. Leather Company, and Distilling & Cattle Feeding Company. The index expanded to 20 stocks in 1920 and to 30 stocks in 1929.

The composition of the Dow is periodically updated to reflect the evolving U.S. economy, though changes are infrequent. Notably, in November 2024, Nvidia replaced Intel, highlighting the growing importance of artificial intelligence and advanced semiconductors in the market.  

Key Milestones

Consider these significant milestones in the Dow's history:

  • The Dow first hit 1,000 in late 1972.
  • Reached 10,000 in March 1999.
  • Climbed to 17,000 in July 2014.
  • Closed above 25,000 in January 2018.
  • Closed just shy of 33,000 on March 15, 2021 (closing at 32,953).
  • Surpassed 40,000 in January 2025, closing at 42,392.27 on January 2, 2025. 

2024 Performance: Winners and Losers

The year 2024 was notable for the DJIA, which posted a gain of approximately 13% (this performance, however, lagged behind the S&P 500's 23% surge, reflecting the diverse dynamics within the stock market. 

In 2024, the DJIA experienced notable fluctuations among its constituent stocks. Here are the five best and worst performers of the year:

Top 5 Performers:

  1. Nvidia (NVDA): Leading the pack, Nvidia's stock surged by nearly 171% in 2024, driven by its dominance in advanced semiconductors for artificial intelligence applications.  
  2. Walmart (WMT): The retail giant saw its shares climb approximately 72%, benefiting from technological advancements and consistent low prices that attracted a broad customer base. 
  3. Amazon (AMZN): After joining the DJIA in February 2024, Amazon's stock increased by about 44%, bolstered by the growth of Amazon Web Services and AI initiatives. 
  4. Goldman Sachs (GS): The investment bank's shares rose by approximately 48%, driven by its expanding asset management business.  
  5. American Express (AXP): The financial services company's stock grew by around 59%, attracting high-spending consumers and benefiting from a robust economy. 

Bottom 5 Performers:

  1. Boeing (BA): Boeing's stock declined by 32% in 2024, making it the biggest loser in the DJIA. The company faced challenges including production issues, supply-chain disruptions, and a significant worker strike.  
  2. Intel (INTC): The semiconductor company's shares dropped by approximately 60%, struggling to keep pace with rivals in the rapidly growing AI market.  
  3. Nike (NKE): Nike's stock decreased by about 28%, facing challenges such as missteps under former leadership, declining sales, and market share losses to competitors.  
  4. Walgreens Boots Alliance (WBA): The pharmacy chain's shares plummeted over 63%, facing mounting challenges in its retail business and culminating in a significant earnings miss.  
  5. Dow Inc. (DOW): The materials company's stock declined by approximately 27% in 2024, leading to its replacement in the DJIA by Sherwin-Williams.  

These performances reflect the dynamic nature of the stock market, influenced by factors such as technological advancements, leadership changes, and industry-specific challenges.

What Financial Advisors Will Predict 

Let’s be honest – did you expect NVIDIA to soar more than 170% last year or Boeing to tumble over 30%? Maybe you thought Nike would have a standout year. But do you remember that not too long ago, Boeing was the Dow’s top performer, surging 89% in 2018 – outpacing even Apple?

Here’s what financial advisors do know: every major company experiences highs and lows. Relying solely on past performance to predict the future is a risky strategy.

So, which stock will come out on top in 2025? It’s anyone’s guess – that’s the Madness of the market. 

And why mutual funds remain a favorite choice for investors.


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