Dow Jones Industrial Average
A price-weighted index of 30 major US blue-chip companies. The oldest US stock index, widely covered in media but less representative than the S&P 500.
The Dow Jones Industrial Average was created by Charles Dow in 1896 and tracks 30 large, well-established US companies selected by the editors of The Wall Street Journal. Unlike most modern indices, it is price-weighted: a $500 stock has more index impact than a $50 stock regardless of market cap.
The Dow's 30 components span most sectors but exclude transportation and utilities (tracked by their own Dow indices). The committee selects representative "blue chip" names — the composition has changed significantly over 130 years.
The Dow moves in "points" which correspond to dollars because of its price-weighting. Financial media quotes the Dow constantly, but most professional investors use the S&P 500 as the primary benchmark.
Related Terms
Blue-Chip Stock
Shares of a large, well-established company with a long track record of stable earnings and often consistent dividends.
BeginnerETF
A basket of securities that trades on an exchange like a single stock. ETFs give instant diversified exposure to an index, sector, or theme.
BeginnerNasdaq Composite
A market-cap-weighted index of all ~3,000+ companies listed on the Nasdaq exchange, with heavy weighting toward technology.
BeginnerS&P 500
A market-cap-weighted index of 500 large US companies. The most widely used benchmark for US stock market performance.
Beginner