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What to watch today: Stocks set for a lower open after Dow closes at another record

Dow Jones Industrial Average
alt=A historical graph. From its record low of under 35 in the late 1890s to a high reached above 14,000 in mid-2011, the Dow rises periodically through the decades with corrections along the way eventually settling in the mid-10,000 range within the last 10 years .
Historical logarithmic graph of the DJIA from 1896 to 2011.
FoundationFebruary 16, 1885; 136 years ago (1885-02-16) (as DJA)[1]
May 26, 1896 (1896-05-26) (as DJIA)[2]
OperatorS&P Dow Jones Indices
Trading symbol^DJI
TypeLarge cap
Market cap$8.33 trillion (Dec. 2019)[3]
Weighting methodPrice-weighted index

The Dow Jones Industrial Average (DJIA), Dow Jones, or simply the Dow (/ˈd/), is a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States. Although it is one of the most commonly followed equity indices, many consider the Dow to be an inadequate representation of the overall U.S. stock market compared to broader market indices such as the S&P 500 Index or Russell 3000 because it includes only 30 large cap companies, is not weighted by market capitalization, and does not use a weighted arithmetic mean.[4][5][6][7]

The value of the index is the sum of the stock prices of the companies included in the index, divided by a factor which is currently (as of September 2020) approximately 0.152. The factor is changed whenever a constituent company undergoes a stock split so that the value of the index is unaffected by the stock split.

First calculated on May 26, 1896,[2] the index is the second-oldest among the U.S. market indices (after the Dow Jones Transportation Average). It was created by Charles Dow, the editor of The Wall Street Journal and the co-founder of Dow Jones & Company, and named after him and his business associate, statistician Edward Jones. The word industrial in the name of the index no longer reflects its composition: several of the constituent companies operate in sectors of the economy other than heavy industry.

The index is maintained by S&P Dow Jones Indices, an entity majority-owned by S&P Global. Its components are selected by a committee. The ten components with the largest dividend yields are commonly referred to as the Dogs of the Dow. As with all stock prices, the prices of the constituent stocks and consequently the value of the index itself are affected by the performance of the respective companies as well as macroeconomic factors.

  1. ^ "Dow Record Book Adds Another First". Philly.com. February 24, 1995. Archived from the original on October 4, 2013.
  2. ^ a b Judge, Ben (May 26, 2015). "26 May 1896: Charles Dow launches the Dow Jones Industrial Average". MoneyWeek. Archived from the original on October 6, 2019. Retrieved October 6, 2019.
  3. ^ "Dow Jones (DJIA) Historical Total Market Cap". Archived from the original on September 28, 2019. Retrieved December 11, 2018.
  4. ^ "Standard & Poor's 500 Index – S&P 500". Investopedia. Archived from the original on June 14, 2012. Retrieved September 15, 2019.
  5. ^ Deporre, James (September 7, 2018). "Ignore the Misleading Dow Jones Industrial Average". TheStreet.com. Archived from the original on August 12, 2019. Retrieved August 12, 2019.
  6. ^ Floyd, David (June 25, 2019). "Discover What Makes the Dow Jones Industrial Average Stupid". Investopedia. Archived from the original on August 12, 2019. Retrieved August 12, 2019.
  7. ^ Dzombak, Dan (April 18, 2014). "Why the Dow Jones Industrial Average Is Useless". The Motley Fool. Archived from the original on August 12, 2019. Retrieved August 12, 2019.
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