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In Don't Be Fooled By The 'Breakout' In Stocks, I discussed the Dow Jones Industrial Average's (DIA) recent break above its 2011 high, as compared to other broader stock market indices that haven't followed suit. The influence that the Dow and its thirty stocks have on the broader psychology of retail investors is impressive, especially given that the individual equities within the index likely represent, at most, a modest percentage of a well-diversified investment portfolio. Nevertheless, if you ask most people how the "market" is doing, the chances are quite good that you will get an answer telling you about the Dow 30.

Now that the Dow has broken above its 2 May 2011 high of 12,876, I thought it would be useful to take a look at each of the thirty stocks in the index to find out how they are doing relative to their 2011 highs, in the hopes of discovering which companies are driving the Dow's outperformance over many other indices.

Below is a table showing the thirty Dow components, their 2011 highs, their 17 February 2012 closing prices, and the percentage change from their 2011 highs:

Company

2011 High

2/17/12 Close

% Change From 2011 High

3M (MMM)

$98.19

$87.56

-10.826%

Alcoa (AA)

$18.47

$10.15

-45.046%

American Express (AXP)

$53.80

$52.86

-1.747%

AT&T (T)

$31.94

$30.01

-6.043%

Bank Of America (BAC)

$15.31

$8.02

-47.616%

Boeing (BA)

$80.65

$75.35

-6.572%

Caterpillar (CAT)

$116.55

$113.95

-2.231%

Chevron Corp (CVX)

$110.01

$106.66

-3.045%

Cisco (CSCO)

$22.34

$20.29

-9.176%

Coca-Cola (KO)

$71.77

$69.05

-3.790%

E.I. du Pont de Nemours (DD)

$57.00

$51.48

-9.684%

Exxon Mobil (XOM)

$88.23

$85.62

-2.958%

General Electric (GE)

$21.65

$19.28

-10.947%

Hewlett-Packard (HPQ)

$49.39

$29.59

-40.089%

Home Depot (HD)

$42.47

$46.71

9.984%

Intel (INTC)

$25.78

$27.37

6.168%

International Business Machines (IBM)

$194.90

$193.42

-0.759%

Johnson & Johnson (JNJ)

$68.05

$64.99

-4.497%

JPMorgan Chase (JPM)

$48.36

$38.47

-20.451%

Kraft Foods (KFT)

$37.93

$38.01

0.211%

McDonald's (MCD)

$101.00

$99.99

-1.000%

Merck (MRK)

$37.90

$38.56

1.741%

Microsoft (MSFT)

$29.46

$31.25

6.076%

Pfizer (PFE)

$21.90

$21.19

-3.242%

Procter & Gamble (PG)

$67.72

$64.91

-4.149%

The Travelers Companies (TRV)

$64.17

$59.85

-6.732%

United Technologies (UTX)

$91.83

$83.78

-8.766%

Verizon Communications (VZ)

$40.25

$38.46

-4.447%

Wal-Mart (WMT)

$60.00

$62.48

4.133%

Walt Disney (DIS)

$44.34

$41.75

-5.841%

Dow Jones Industrial Average

12,876.00

$12,949.87

0.574%

Despite the Dow now trading 0.574% above its 2011 high, only six of the thirty stocks in the index have followed suit and are trading above their highs from last year. The six companies are Home Depot (HD), Intel (INTC), Kraft Foods (KFT), Merck (MRK), Microsoft (MSFT), and Wal-Mart (WMT).

Given that the Dow is a price-weighted index, you might be surprised to see that IBM (IBM), Caterpillar (CAT), Chevron (CVX), and McDonald's (MCD), the four Dow stocks whose 2011 highs were over $100 per share, are all actually trading below last year's highs. The next four highest priced stocks in the index, 3M (MMM), Exxon Mobil (XOM), United Technologies (UTX), and Boeing (BA), are also all trading below their 2011 highs. The stocks of those eight companies, representing 26.67% of all equities in the Dow, have a combined weighting of 49.57%, and they are all still trading below their 2011 highs.

With that said, only three of the thirty stocks in the Dow reached their 2011 highs along with the index on May 2. Therefore, it seems useful to examine the 2 May 2011 highs of each of the components to see how each of them has performed since that date.

Below is a table showing the thirty Dow components, their 2 May 2011 highs, their 17 February 2012 closing prices, and the percentage change from their 2 May 2011 highs:

Company

5/2/11 High

2/17/12 Close

% Change From 5/2/11 High

3M

$97.95

$87.56

-10.607%

Alcoa

$17.47

$10.15

-41.900%

American Express

$49.81

$52.86

6.123%

AT&T

$31.72

$30.01

-5.391%

Bank Of America

$12.47

$8.02

-35.686%

Boeing

$80.65

$75.35

-6.572%

Caterpillar

$116.55

$113.95

-2.231%

Chevron Corp

$109.5799

$106.66

-2.665%

Cisco

$17.595

$20.29

15.317%

Coca-Cola

$67.86

$69.05

1.754%

E.I. du Pont de Nemours

$57.00

$51.48

-9.684%

Exxon Mobil

$88.13

$85.62

-2.848%

General Electric

$20.71

$19.28

-6.905%

Hewlett-Packard

$40.78

$29.59

-27.440%

Home Depot

$37.67

$46.71

23.998%

Intel

$23.18

$27.37

18.076%

International Business Machines

$173.54

$193.42

11.456%

Johnson & Johnson

$66.31

$64.99

-1.991%

JPMorgan Chase

$45.99

$38.47

-16.351%

Kraft Foods

$33.87

$38.01

12.223%

McDonald's

$78.93

$99.99

26.682%

Merck

$36.575

$38.56

5.427%

Microsoft

$26.00

$31.25

20.192%

Pfizer

$21.20

$21.19

-0.047%

Procter & Gamble

$65.45

$64.91

-0.825%

The Travelers Companies

$63.79

$59.85

-6.177%

United Technologies

$90.67

$83.78

-7.599%

Verizon Communications

$38.33

$38.46

0.339%

Wal-Mart

$55.08

$62.48

13.435%

Walt Disney

$43.79

$41.75

-4.659%

Dow Jones Industrial Average

12,876.00

$12,949.87

0.574%

When comparing the 2 May 2011 highs of each of the thirty index components to the Dow's 2011 high occurring on that date, we then find that 12 of the thirty stocks are up since then. While 12 is a less-than-impressive number, eight of those twelve are up double digits since that time. Furthermore, IBM, the top weighted stock in the Dow (11.38% weighting as of 15 February 2012), is one of the stocks up more than 10% since its 2 May 2011 high. McDonald's, the fourth highest weighted stock in the index at 5.84%, is up a whopping 26.682% since its 2 May 2011 high. Since last May, these two companies have been quite instrumental in helping the Dow get back to and eventually exceed the highs of last year.

It is certainly exciting that the Dow Jones Industrial Average has managed to exceed its highs of last year, reaching its highest level since the bull market began in 2009. However, I hope that this article, as well as Don't Be Fooled By The 'Breakout' In Stocks (linked above), and the articles I've written recently about Apple's importance in the stock market, helps investors become more aware of the role that a relatively small group of stocks are playing in the markets.

Keep in mind that a market benefitting from the outperformance of a narrow group of heavily weighted/favored equities can also suffer at the hands of the same stocks should things go awry.

Source: The Breadth Of The Dow's 'Breakout' Is Terrible