High-Priced Stocks Nearly Saved the Dow From Turning Red Today

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The market is looking strange today. As of this writing, 23 of the 30 Dow Jones (DJINDICES: ^DJI  ) components are trading in the red, but the index itself is down by just 0.1%. The Dow is also outperforming other major market barometers today. What's going on here?

This is one of those days when the Dow's weird price-weighting nature works to the index's advantage. Three of the top five Dow stocks, ranked by share price and not by market cap, are trading against the bitter wind.

 

Price Change

Dow Points Change

Visa

2.4%

32

IBM

-1.2%

-13

Goldman Sachs

-0.8%

-5

Boeing

1.3%

11

3M

2.4%

20

Data from The Wall Street Journal. .

These five stocks wield heavier bludgeons than anyone else on the Dow, and they're swinging their weapons to great effect today.

IBM (NYSE: IBM  ) is sagging a bit, taking the edge off Monday's value-hunting trading volume surge. Shares are back where they were four days ago. Today's 1.2% drop took 13 points off the Dow. Goldman Sachs is down 0.8% on macroeconomic nerves, which is just a tad worse than the -0.6% median move on today's Dow.

If only these two stocks had traded sideways instead of down, the Dow as a whole would have been sitting on positive returns.

Ah, but the gainers in this elite-of-the-elite club are pulling harder than the losers. Boeing (NYSE: BA  ) just hiked its dividend by 50% and added another $10 billion to its share buyback authorization. 3M (NYSE: MMM  ) only topped its dividend by 35% but matched Boeing's buyback refill. Both stocks soared on the shareholder-friendly news.

I can't for the life of me figure out why Visa (NYSE: V  ) is rising today, while most of its consumer credit rivals are going the other way. But the Dow doesn't ask for a reason; all that matters is that the highest-priced stock on the entire index also happens to be its biggest gainer right now, back-to-back with 3M.

So Visa brought 40 Dow points to the party, all by itself. These five stocks added 63 points to the Dow Jones index on Tuesday and removed only 18, for a top-5 net gain of 45 points.

And that's how the Dow is beating other indices today. All the right stocks are moving up and most of the losers can be ignored.

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