The Tell: Why the Dow is having a killer month as it heads for best October ever

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The Dow Jones Industrial Average has been criticized by some market watchers for being a poor barometer of equity-market performance given its relatively small sample size of just 30 stocks.

But this quality, along with the paucity of megacap technology names, has helped shepherd the index toward what’s expected to be its biggest October gain in its 126-year history.

With a month-to-date gain of 14.40% through Friday, the Dow DJIA, +2.59% is on track for its best monthly performance since January 1976, when it rose 14.41%, according to Dow Jones Market Data. To clinch its best October ever, it only needs to hang on to a month-to-date gain of 10.65% by the time the U.S. market closes on Monday.

The Dow is still in a bear market, but is now down less than 10% for the year to date. That compares, however, with year-to-date losses of 18.2% for the S&P 500 SPX, +2.46% and 29% for the Nasdaq Composite COMP, -8.39%.

Read: What the Dow’s stellar October and Big Tech’s ugly rout say about the stock market right now

What exactly has made the Dow’s October performance so stellar?

 The blue-chip gauge is packed with energy and industrials stocks, which have been among the best performing sectors for the stock market since the start of the year, noted Art Hogan, chief market strategist at B. Riley Wealth Management. 

These stocks have performed particularly well since the start of the latest quarterly earnings season, while megacap technology names like Meta Platforms Inc. META, +1.29%, Inc. AMZN, -6.80% and Alphabet Inc. GOOG, +4.30% have sputtered after delivering results and guidance that disappointed Wall Street this week.

“It’s very tech-light, and it’s very heavy in energy and industrials, and those have been the winners,” Hogan said. “The Dow just has more of the winners embedded in it and that has been the secret to its success.”

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The Dow is on track to log its highest close in at least two months on Friday as it outperforms both the S&P 500 SPX, +2.46% and Nasdaq Composite COMP, -8.39%. Furthermore, it’s on track to climb for a sixth straight session, what would be its longest winning streak since May 27, according to DJMD. 

Adding to the list of notable factoids, the average is also on track to log a fourth straight weekly gain, which would cement its longest winning streak since Nov. 5, 2021, when the index rose for five straight weeks. 

Caterpillar Inc. CAT, +3.39%, Chevron Corp. CVX, +1.17% And Amgen Inc. AMGN, +2.46% are the top-performing Dow stocks so far this month, having gained 29.3%, 21.2% and 18.3%, respectively, as of Friday.  

In recent trade, the blue-chip average was up around 700 points, or 2.2%, on track for its biggest daily point and percentage gain in exactly one week.