UnitedHealth stock is crushing the Dow. Here's the math behind the slide.

UnitedHealth Group banal crashed connected Thursday, falling much than 22% and putting the banal connected way for its largest single-day diminution since 1998.

The descent is simply a occupation for the wellness security giant, nary doubt.

But the diminution besides created a broader disturbance successful markets, specifically for the Dow Jones Industrial Average (^DJI).

Unlike its adjacent indexes, the S&P 500 (^GSPC) and Nasdaq Composite (^IXIC), the Dow is calculated utilizing the per-share terms of its members, not the marketplace capitalization of the companies successful the index.

UnitedHealth (UNH) stock, which earlier Thursday's driblet boasted a terms successful the $500 range, exerts the biggest power connected the Dow contempt the company's marketplace worth being ranked lone eighth among the Dow's 30 members.

In day commercialized connected Thursday, the Dow was disconnected 260 points, oregon astir 0.6%, portion the S&P 500 was up 0.9% and the Nasdaq traded astir 0.5% higher.

The Dow dates backmost to 1896, making it the oldest of the large US banal marketplace averages.

Created by writer Charles Dow, the scale initially tracked the 12 concern companies that were the motor of the US system astatine the time. By 1928, the fig of components had accrued to 30, wherever it stands today.

The scale mean is calculated utilizing the alleged Dow divisor, a fig that changes based connected the banal prices of the Dow's members. The Dow divisor contiguous stands astatine astir 0.163, which astir means each $1 alteration successful the terms of a Dow member's banal results successful a astir 6.1-point alteration successful the index.

UnitedHealth's diminution connected Thursday, for instance, shaved arsenic galore arsenic 800 points disconnected the Dow each connected its own.

Read more: Here's what to bash with your status savings successful a marketplace sell-off

The per-share terms of immoderate company's banal is simply its marketplace capitalization divided by the fig of shares outstanding. The numerator successful this calculation is however overmuch investors deliberation the company's aboriginal currency flows are worth, discounted backmost to the present. The denominator is arbitrary, acceptable astatine the discretion of management.

As the illustration beneath shows, anterior to the stock's plunge, UnitedHealth shares had the largest terms weighting among Dow components, followed by Goldman Sachs (GS) and Microsoft (MSFT).

"The Dow is simply a dinosaur," manufacture seasoned and erstwhile Citi managing director, Dave Weisberger, told Yahoo Finance.

"The Dow is 1 of those symbols of American concern ... but it's nary longer typical of the modern fiscal system," helium added. "There's a crushed wherefore the S&P 500 is the bellwether by which everybody who is adjacent remotely superior astir the marketplace measures the broader banal market."