Blue Chip Two-Step

The Dow backed off again Thursday and was outpaced by the NASDAQ for the second day in a row. While the blue chip index was falling 29.24, the NASDAQ index lost only 1.87 and the S&P 500 dropped 1.71.

What is factoring into the equation for larger drops on the Dow in relation to the other indices is oil. Dow component stocks are generally more energy-dependent than the smaller, nimbler techs which populate the NASDAQ. In a simplified way, they will feel the impact of higher (and lower) energy prices in more profound ways than the techs.

Additionally, Exxon-Mobil (XOM) is a component, so moves in oil price relate directly to that company. It's not complete, nor is it a closed system, but the overriding principle is that higher oil (and to some extent other commodities) prices will have a more pronounced effect on the blue chips of the Dow.

Light sweet crude for March delivery gained $2.00 on Thursday, closing at 59.71.