Shortly before 2 p.m. EDT, the Dow Jones
The key reason
The biggest reason for the Nasdaq's recent outperformance centers on one key company: Apple
Apple's year-to-date return of 55.9% explains about 9 percentage points -- or nearly all of the Nasdaq's outperformance. As Foolish colleague Dan Dzombak notes, if the Dow had added Apple instead of Cisco back when it replaced GM in June 2009, the Dow would be approaching 15,000 right now, rather than battling to stay above 13,000.
Oh, and about that divergence between the Dow and Nasdaq today? Apple is up 1.18% so far today, so that alone explains a third of the Nasdaq's outperformance.
Another reason the Dow's lagging behind
Beyond Apple's absence from the Dow, there's another reason the index is trailing this year: The Dow's top performers hold little weight in the index. The top three performing Dow stocks this year -- Bank of America
The point? The Dow's big winners don't have much effect on the index. If every company in the Dow held an equal amount of weighting, the Dow would have returned 11.2% during the first quarter instead of the 8.1% it notched with its current price-weighted methodology.
So there you have it: The Dow's underweighting of certain outperforming companies and Apple's amazing run have conspired to hold the indexes returns down. In the end, that's why you're best off looking at multiple indexes beyond the Dow, like the S&P 500, to get a feel for how the market's doing at any given day.
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Eric Bleeker owns shares of no company listed above. The Motley Fool owns shares of IBM, Bank of America, Microsoft, JPMorgan Chase, and Apple. Motley Fool newsletter services have recommended buying shares of Apple and Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. The Motley Fool has a disclosure policy.