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The following is the chart of BA (Boeing) for 10/11/2021. In the chart, around 12:00 PM, the BA goes down. DOW Index goes down in relation to the BA move. All other stocks do down proportionately.

My questions are on what happened here:

  1. Did the investors sell BA shares which brought down both BA as well as the DOW Index as a result?
  2. Did the investors sell DOW Index funds (mutual or ETF) which brought down the Index and the BA too?
  3. Is it possible that the price of BA will be up and same if the DOW Index goes up to the same level?
  4. What technical indicator that I need to use to see the % of BA in the DOW Index?
  5. What technical indicator that I need to use to see the % of impact of BA on the DOW Index or Vice Versa?

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  1. The DOW is a price-weighted index. Boeing makes up about 4% of the index, so any price movement in BA has a very minor effect on the index. It's more likely that the market as a whole was down due to some larger effect, and BA and the DOW were down because they are components of the market.

  2. Index funds track the index, which is a computed number from its component stocks. Trading index funds does not directly affect the value of the index or the prices of the stocks within them.

  3. I don't understand the question, but they can move independently (e.g. they can go in the same or opposite directions based on the movements of the other 96& of the index)

  4. I don't know of a technical indicator, but the components and weights of the index are published.

  5. The impact of the stock on the index is proportional to its weight. The index does not have an effect on its components (it is a calculation based on the prices of its components; it cannot be manipulated independent of them).

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    Re: "Trading index funds does not affect the index or the stocks within them." ... if you're referring to the price of the index, or the price of the stocks within them, then that part isn't true.
    – Chris W. Rea
    Oct 12, 2021 at 13:15
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    The index is calculated from the prices of its constituents and is not affected by trading of funds that track the index. I left out that there could be secondary effects if enough people buy/sell an index fund that the fund has to buy/sell the constituents to maintain tracking, but to my knowledge that effect is minimal. If I'm missing something else please let me know.
    – D Stanley
    Oct 12, 2021 at 13:20
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    @DStanley Is that really secondary? If I buy or sell 1 BA share, I won't move the price. If I buy or sell a million shares, surely the price will move. The same holds for ETF shares: if I buy a million ETF shares, a lot of them will be created eventually.
    – glglgl
    Oct 12, 2021 at 13:46
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    @glglgl If you buy a million ETF units, some will come from sellers, some will get created. The creation of those new units will probably result in the buying of constituent shares, which may have some price movement as well. That's why I call it secondary. The buying results in some share creation, which results in some buying, which has some impact on constituent share price.
    – D Stanley
    Oct 12, 2021 at 13:58
  • "but to my knowledge that effect is minimal." – I can't imagine why it would be. At least, I can't imagine why the effect would be more minimal than the effect of buying individual stocks. Buying a Dow index fund is essentially the same as buying the component stocks, so if Boeing makes up about 4% of the Dow, then investing $1,000,000 in a Dow index fund should have the same effect as investing $40,000 in Boeing and $960,000 in the other components of the DJIA. Right?
    – Tanner Swett
    Oct 14, 2021 at 14:47

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