Indexes

Dow Jones Industrial Average

The Dow Jones Industrial Average (DJIA), also widely regarded as the Dow, is an index in the stock market that tracks the performance of 30 large, publicly traded companies traded on the New York Stock Exchange (NYSE) and the NASDAQ. The Dow, founded in 1885, is one of the oldest and most well-known stock market indices in the world, and it's frequently used as a measure of how well the U.S. stock market and the nation's economy are doing overall.

The 30 companies that comprise the Dow are chosen by The Wall Street Journal's editors based on aspects including market capitalization, industry representation, and financial stability. The weight of the index is determined by the stock prices of its constituent companies, with higher-priced stocks having a greater weight in the calculation.

The Dow is a price-weighted index, which means that its value is determined by the stock prices of the constituent companies rather than their market capitalizations. As a result, the Dow can be greater influenced by companies with higher stock prices than by the market capitalization of its constituent companies.

Investors use the Dow as a benchmark for the success of their individual portfolios and as a barometer of the state of the stock market as a whole. Nevertheless, the Dow is simply one of numerous stock market indices and should not be depended upon exclusively when making financial decisions.