Why Bank of America Couldn't Save the Dow Today

After starting down roughly half a percent in early trading, the Dow almost broke even and the S&P 500 eked out a gain. The Nasdaq fared slightly better than its less tech-focused brethren:

Index	Change	Ending Value
Dow Jones Industrial Average (INDEX: ^DJI  )	-13.02 [-0.10%]	12,449.45
Nasdaq (INDEX: ^IXIC  )	+8.26 [+0.31%]	2,710.76
S&P 500 (INDEX: ^GSPC  )	+0.40 [+0.03%]	1,292.48

Not surprisingly given a flattish market, there wasn't any major market-moving news today. You can fill in your own vague explanations involving slightly favorable U.S. economic news or slightly unfavorable European economic news.

But there was a lot of movement in individual stocks.

Bank of America (NYSE: BAC  ) was the biggest Dow mover today, up 3.6%, to bring its year-to-date recovery off a disastrous 2011 to 23.6%!

But it couldn't bring the Dow into positive territory today. In fact, IBM's (NYSE: IBM  ) 0.6% gain had four times the effect on the Dow that Bank of America's 3.6% did. Why is that? Because the Dow is weighted by the share price of its components (as opposed to the S&P 500, for example, which is weighted by market cap). With IBM in the $180s, and Bank of America trading for less than $7, each IBM price movement has 20-30 times the effect of a Bank of America price movement.

Leading the 16 Dow losers today (out of 30) was Disney, with a 2.3% drop (though Coca-Cola's 1.8% and Chevron's 1.4% losses had bigger effects).

In short, it was another great day for Bank of America, a middling day for the market, and a good time to brush up on our Dow basics. But remember to keep all the daily noise in perspective. Invest for the long term. And if you're looking for a long-term stock pick, our chief investment officer has identified his No. 1 stock for the next year. Find out which stock he likes in our brand-new free report: "The Motley Fool's Top Stock for 2012." I invite you to take a copy, free for a limited time. Get access to the report and find out the name of this legendary company.