Dow Jones trails Nasdaq again in 2025 despite solid 14.9% return
The Dow Jones Industrial Average (DJIA) delivered a 14.9% total return in 2025, yet it continued to lag behind the Nasdaq Composite. This marks the eighth time in the past decade that the DJIA has underperformed its tech-heavy rival. The difference in performance stems partly from how each index is structured and which sectors dominate them.
Unlike the market-cap weighted Nasdaq Composite and S&P 500, the DJIA remains price-weighted. This method gives higher-priced stocks more influence, regardless of company size. Over the last 10 years, the Nasdaq Composite surged by 408.3%, while the S&P 500 rose by 298.3%. The DJIA, in contrast, gained 242.6%—a solid but weaker showing.
Financials lead the DJIA, accounting for 28.3% of its composition. Industrials follow at 14.7%, and tech makes up just 20.2%. The S&P 500, however, holds 34.4% in tech, reflecting its heavier focus on growth sectors. The SPDR Dow Jones ETF also trades at a lower price-to-earnings ratio than its S&P 500 and Nasdaq counterparts, suggesting better value for investors.
Analysts note that the DJIA's emphasis on value stocks—like Coca-Cola, Procter & Gamble, and Chevron—could help it weather market downturns better than the Nasdaq or S&P 500. These dividend-paying companies often provide stability when growth stocks falter. The index saw no changes in 2020, and no updates were reported for its lineup in 2025.
The DJIA's 2025 return of 14.9% highlights its steady but slower growth compared to broader indices. Its structure and sector mix make it a potential hedge during sell-offs, particularly for investors seeking value. With financials and industrials playing a larger role, the index remains distinct from its tech-driven peers.
