Coronavirus Pandemic – How Nasdaq has Outperformed the Dow during the Pandemic

(Click on the image to enlarge)

Highlights...

1. The top graph demonstrates that after bottoming out on 3/23 at a closing price of 8,592, the Dow Jones Industrial Average (Dow) made an unexpectedly momentous reversal. While its growth started to taper between 6/10 and 7/10, it resumed its upward movement gradually. But it has yet to re-test its prior high of 29,551 set on 2/12. Nonetheless, the Dow has jumped 50% between 3/23 and 8/10.

2. The bottom graph shows that Nasdaq also hit bottom on 3/23 at a closing price of 6,861. However, unlike the Dow, it continued its majestic run, even far exceeding its prior all-time high of 9,817 set on 2/19 and recently eclipsing a short zenith of 11K. The trend has been a near-perfect 45-degree linear -- an impressive performance indeed. Between 3/23 and 8/10, Nasdaq has skyrocketed 60%, an even better feat than the Dow.

(Click on the image to enlarge)

3. The above scatter plot shows that Nasdaq had outperformed the Dow after the two indices started forking in mid-June when the Dow and Nasdaq were roughly 24,600 and 8,900, respectively. After the fork, the Dow began to taper while Nasdaq continued its eye-popping journey.

4. Generally, these two indices more or less move in tandem, but this fork -- resulting in two different slopes --was significant, leading to the low r-squared value. The slope of the Nasdaq index became exponential, while the Dow fell into a logarithmic model, slowly tilting down.

The market reversal after the historic fall in March was just terrific.

Stay safe!

Data Source: Yahoo Finance

-Sid Som
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