Microsoft is a member of the Dow Jones Industrial Average, the 30-stock index that aims to be representative of the US economy.
At $US53.32, MSFT is up $US5.28, or 11%, since Thursday’s market close. That’s adding 35.27 points off the Dow.
How’d we compute that?
The Dow is peculiar in that it is a price-weighted index, meaning stocks with the highest share prices have the most influence on the index’s movements.
According to The Wall Street Journal, the current Dow divisor is 0.149677, meaning a 1-point move in any Dow stock moves the Dow by 6.6810 points (the reciprocal of the divisor). So if you want to calculate how many points a Dow stock is adding to or subtracting from the Dow, use this formula:
(Dollar change in stock price) x 6.6810= (Point change in the Dow)
MSFT is up $US5.28. So:
5.28 x 6.6810 = 35.27 points
Its recent price makes MSFT the 23nd-most influential stock in the Dow, which means it has very little influence on the index. That’s a source of controversy because at $US384 billion, it’s the second largest company by market cap behind Apple.
That’s pretty much all you need to know about that.