Squawk Mornign Briefing: Pretty Dow

The IBM effect caused the DJIA to dramatically outperform the S&P 500 on Wednesday. Sure, IBM is part of the S&P 500 also, but it has the largest influence on the DJIA yet is just one of the larger influences on the S&P 500. Plus being the biggest fish in a small pond of 29 other stocks is quite different from being near the top of the food chain relative to 499 others.

Meanwhile, a dramatic turn down in AAPL will weigh on the S&P 500 — it is the single largest influence on that index. For the reasons mentioned, it doesn’t exert as significant an influence over the S&P 500 as IBM does on the DJIA but with AAPL down 50 points pre-market we should see at least 5 points come out of the S&P 500 based on the single stocks performance. Perhaps more notable is the absence of AAPL in the DJIA so the blue chip index won’t suffer and direct negative effects from the company’s plunge.

That should have the DJIA continuing to sit pretty today, at least relative to the other indices. It doesn’t tell us whether it will go up or down, but it is likely to outperform both the S&P 500 and NASDAQ 100 again today. MMM reported in-line earnings this-morning and it is the third highest priced component in the DJIA and, therefore, has the third highest weighting but with minimal movement pre-market it is signalling that it might not have a dramatic impact today. MSFT, another DJIA component, reports after the bell but it’s more modest share price means it’s unlikely to have a dramatic impact.

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