Terrible? Hyperbole. The 30 companies are pretty big and relevant, so still it works out well. Also, the DJIA pays a sightly larger dividend than the S&P 500. Also it's not an economic indicator.
Can you explain this statement? It's almost synonymous with the stock market, and is one of the most common headline numbers that people mention in business and economy news reports.
When stock markets plunge people panic and that panic is what causes economic instability. That's what causes issues. Economics is purely a product of human minds acting in unison or opposition.
For this to happen, though, enough people must be thinking that the market is poised for a big fall, so they're on a hair trigger, ready to sell right at the start of the drop.
The stock market would not be the economy in say, a Marxist system.
So a stock market index is only correlated with the local economy if there are few multinationals.