Dow Industrials - And All Markets - Are Affected By This One Boring Stock

It appears that the focus of investors will be on the big banks' earnings Friday, and the possibility that they will stir up volatility, but an unassuming stock could have a bigger impact on the market than most people realize.

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Among the 126 blue-chip companies that form the Dow Jones Industrial Average, UnitedHealth holds the biggest weighting in the benchmark. It is price-weighted, which means that the higher the stock price, the higher its weighting in the bar.

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During the trading session Wednesday, UnitedHealth closed at $520.97, compared to Goldman Sachs at $327.37, the stock that had the second-highest impact on the 30-stock Dow, which is nearly $200 less than UnitedHealth.

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In earnings seasons, large lenders and technology companies receive a lot of attention, while health insurers are rarely regarded as stock plays with much potential. It is important to note, though, that UnitedHealth is not the only company reporting earnings on Friday before the bell, but also JPMorgan and Wells Fargo. Both of these companies impact the market that cannot be ignored.

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A source of some of the Dow's gains for April, accompanied by nearly 319 points, has given UnitedHealth a credit for nearly 78% of the whole movement. The stock is on a tear this month, rallying more than 10% since the beginning of the month.

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In the 1890s, the Dow Jones Industrial Average was created to represent a regular investor's portfolio - a simple average of the prices of all constituent stocks - and was largely composed of blue-chip consumer discretionary and industrial names. It is regarded as a proxy for wider economic conditions. 

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In spite of the fact that nearly all other equity indexes are weighted on the basis of market capitalization, including the S&P 500 and the Nasdaq Composite indexes, UnitedHealth still maintains a significant share of the market share. In addition, with a market capitalization of $486 billion, the insurer is ranked ninth on the S&P 500 list as the largest insurer.

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