Dow Jones Industrial Average


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Dow Jones Industrial Average

The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. The Dow, as it is called, is a barometer of how shares of the largest US companies are performing. There are hundreds of investment indexes around the world for stocks, bonds, currencies, and commodities.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Dow Jones Industrial Average

A stock market index founded in 1896 by Charles Dow tracking 30 companies in various industries thought to be representative of the American economy. It is a price-weighted index, meaning that stocks with higher prices per share affect the average more. It also scales its averages to account for stock splits and other changes in the companies tracked. All stocks tracked in the DJIA are traded on either the New York Stock Exchange or NASDAQ. It is considered the premier securities index in the United States.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Dow Jones Industrial Average (DJIA).

The Dow Jones Industrial Average (DJIA), sometimes referred to as the Dow, is the best-known and most widely followed market indicator in the world. It tracks the performance of 30 blue chip US stocks.

Though it is called an average, it actually functions more like an index. The DJIA is quoted in points, not dollars. It's computed by totaling the weighted prices of the 30 stocks and dividing by a number that is regularly adjusted for stock splits, spin-offs, and other changes in the stocks being tracked.

The companies that make up the DJIA are changed from time to time. For example, in 1999 Microsoft, Intel, SBC Communications, and Home Depot were added and four other companies were dropped. The changes are widely interpreted as a reflection of the emerging or declining impact of a specific company or type of company on the economy as a whole.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
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