To calculate the index, Dow added up the stock prices of the 12 companies and forex broker divided the total by 12. In the fast-paced world of investing, understanding key market indices is essential for making informed decisions and maximizing returns. Among the most renowned indices, the Dow Jones stands tall as a symbol of market performance and economic vitality.

1915 (0 record closes)

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet. The Dow Jones is treading choppy waters near 44,700 on Tuesday, finding an intraday floor near 44,400 before settling back into the day’s opening bids. The major equity index briefly set another record all-time high bid just above 44,800, but bulls are beginning to show signs of exhaustion. There is no set cadence for updating the companies that make up the Dow. As the U.S. economy evolves, with new sectors gaining prominence, the index follows suit.

Most professional investors focus on the performance of the S&P 500 because it includes a broad range of stocks and is weighted by market cap, which is a more accurate way to measure the overall health of the stock market. This means that the Dow gives more weighting to companies with more expensive stock. The DJIA’s price weighting does not account for market capitalization, which is the total market value of all of a company’s shares.

However, Dow Jones & Company, the publisher of the index (alongside other financial publications), is headquartered in the United States, with its main offices in New York City. By the end of this article, investors will be equipped with the relevant knowledge and insights to navigate the DJIA with confidence. Previously, the Dow had fallen from 11,723 in January 2000 to 9,389 in March 2001, dropping 20% (from 20,520 to 16,434 points, inflation-adjusted).

How is the value calculated?

Despite equities broadly maintaining an even stance on Tuesday, the Dow Jones suffered an outweighed decline after Amgen reported the latest results from their experimental weight loss drug that undershot investor expectations. The Dow Jones Industrial Average (DJIA) fell back on Tuesday, shedding over 250 points at its lowest point. The major equity index recovered its footing heading into the back half of Tuesday’s US market session, pushing back into record territory north of 44,800 as investors shrug off headwinds to keep bullish momentum on-balance. We believe everyone should be able to make financial decisions with confidence.

Stock market today: Indexes traded mixed as investors await fresh inflation data

• Perhaps the most infamous trough was during the Great Depression, in which the Dow lost about 90% of its value over three years.
• As of 2024, Dow Jones & Company continued to be a major source of financial news.
• They included the oldest index, the Dow Jones Transportation Average, which tracks 20 transportation companies, such as airlines and delivery services.
• For example, the divisor was adjusted before the markets’ opening on April 2, 2019, when Dow Inc. (no relation to Dow Jones) replaced DowDuPont Inc. as a component.

The Dow tracks 30 large, publicly owned blue-chip companies trading on the New York Stock Exchange and the Nasdaq. The selection is not based on strict quantitative criteria but rather on the decisions of the editors of The Wall Street Journal. Companies are chosen based on their reputation, growth, and relevance to the economy, with the aim of reflecting the overall health and trends of the industrial sector of the U.S. economy. However, you cannot invest directly in the Dow Jones Industrial Average because it is just an index. The DJIA initially launched with just 12 companies based mostly in the industrial sectors.

Dow Jones was not a single person, but two of the three people who founded Dow Jones & Company in 1882. Charles Dow was the Dow in Dow Jones, Edward Jones was the Jones, and Charles Bergstresser was the company’s third founder. In 1889, they went on to found The Wall Street Journal, which remains one of the world’s most influential financial publications.

A cyclical bull market is a period in which the stock market index is reaching 52-week or multi-year highs and may briefly peak at all-time highs before a rapid decline, as in the early 1970s. It usually occurs within relatively what is swing trading longer bear markets and lasts about three years. The Dow Jones Industrial Average (US 30) is not readjusted and checked on a fixed schedule like some other indices such as the UK FTSE 100.

Our estimates are based on past market performance, and past performance is not a guarantee of future performance. The exact methodology for calculating the Dow Jones involves dividing the sum of the stock prices of the 30 components by a divisor that is adjusted periodically to account for stock splits, dividends, and other corporate actions. This calculation ensures that changes in the price of any individual component do not disproportionately impact the index. Because of the price-weighted calculation method, a $1 change in the price of a stock in the DJIA doesn’t equate to one point in the index since that depends on the Dow divisor at the time.

The Dow Jones Industrial Average (DJIA), Dow Jones, or simply the Dow (/ˈdaʊ/), is a stock market index of 30 prominent companies listed on stock exchanges in the United States. In the early 20th century, the performance of industrial companies was typically tied to the overall growth rate in the economy. That cemented the relationship between the Dow’s performance and the overall economy. Even today, for many investors, a strong-performing Dow equals a strong economy, while a weak-performing Dow generally means a slowing economy.

Since first closing at 62.76 on February 16, 1885,1 the Dow Jones moving average crossover Industrial Average has increased, despite several periods of decline. Blue-chip stocks typically represent well-established, financially stable, and reputable companies with a long history of success. However, it’s important to note that not all companies in the DJIA can be categorized as blue-chip stocks. Some companies may exhibit characteristics that align more closely with growth stocks or value stocks.

The Dow Jones Industrial Average (DJIA) is composed of 30 large, publicly traded companies that are considered to be representative of the U.S. stock market. These companies come from various sectors of the economy, including technology, healthcare, finance, retail, and more. In the Dow Jones, stocks with higher prices have a greater impact on the index’s movements. Therefore, a higher-priced stock will have a larger weight in the index compared to a lower-priced stock, regardless of the market value of the company. This resulted from the aim to reflect the performance of these influential companies in the index’s movements. These different U.S. indices offer investors a more comprehensive and nuanced view of the stock market, allowing for analysis and benchmarking across various segments and industries.