The Dow Jones and S&P 500 Are Diverging in a Historic Moment
The Dow and S&P 500 are going separate directions today in what is a historic occasion that sees the Dow losing more than 1%.
Quick overview
- The Dow Jones fell 1.02% while the S&P 500 rose 0.39%, marking a significant divergence between the two indices.
- UnitedHealth's stock plummeted 22.45% due to higher-than-expected costs from increased healthcare demand among seniors.
- This is the first instance of the S&P 500 gaining while the Dow has fallen more than 1% on the same day, driven primarily by UNH's performance.
- Apple gained 2% on news of tariff exemptions for electronic devices, while Nvidia faced a 2.62% loss due to U.S. government restrictions.
The Dow Jones fell 1.02% on Thursday as the S&P 500 climbed 0.39%. The Nasdaq Composite was down as well, losing 0.02% at the time of this writing.
UnitedHealth (UNH) is the main reason the Dow has lost so much ground today, as this stock plummeted 22.45% on Thursday. The company had to adjust its guidance for the year and revealed that its costs were higher than expected due to more seniors seeking healthcare. As Americans live longer, insurance companies like UnitedHealth will have to foot the bill for their expensive medical care in their later years.
Usually, the Dow does not perform so poorly in comparison to the S&P 500, often outperforming it or staying around the same level. But today marks something of a historical moment in a comparison of the two indices. The two indices tend to move together, but they diverged significantly today and will likely continue to do so until UNH’s stock price settles down.
This is the first time that the S&P 500 has gained while the Dow has fallen more than 1% on the same day, and it all comes down to that one stock. Because the Dow only shows the movement of 30 stocks, when one of them moves significantly, it can drastically impact the entire index.
The Market at a Glance
UNH does not tell the story for the entire stock market, so investors need to pay close attention to what is actually happening among the other stocks. UNH is not down today because of tough market conditions or new tariff policies, so its steep drop should not affect the rest of the market much at all.
Apple (AAPL) is doing very well today, gaining 2% and most likely getting a boost from news that smartphones and other electronic devices would be exempt from new tariffs for now. There may be electronic tariffs coming, but those will most likely hit semiconductors first and will mostly leave companies like Apple alone.
Nvidia (NVDA) is not doing as well, with a loss of 2.62% today as it deals with restrictions from the U.S. government. Nvidia will have to charge more for its products very soon in response to high fees related to its AI-powered H20 chip. The U.S. has banned exports of that chip to countries like China that have not given into the current administration’s demands over tariffs. Nvidia expects to pay $5.5 billion in fees if it continues its relationship with Chinese customers in the face of the ban.
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