What Is the Dow Jones Industrial Average?
In short
The Dow Jones Industrial Average is a price-weighted index of 30 large US companies, calculated by S&P Dow Jones Indices as the sum of their share prices divided by a divisor.
The Dow Jones Industrial Average, often called the Dow, was first published in 1896 and has had 30 components since 1928. Despite the word industrial in its name it includes companies from many sectors; transportation companies and utilities are the exception, because they are covered by the Dow Jones Transportation Average and the Dow Jones Utility Average. The components are chosen by a committee at S&P Dow Jones Indices and not by a fixed numerical rule.
The Dow is price-weighted: its value is the sum of the 30 share prices divided by a divisor. A price change in a high-priced share moves the index more than the same percentage change in a lower-priced share, whatever the size of the company behind it. The divisor is not 30; it is adjusted for stock splits, component changes and other events to keep the series continuous, so adding up the prices and dividing by 30 does not reproduce the published value.
This construction explains why the Dow and the S&P 500 can move differently on the same day. The S&P 500 weights companies by float-adjusted market value and the Dow weights them by share price, and the Dow has far fewer members. The Dow's level is a number of points and not an average price of 30 shares. Funds and futures that track it are separate products.
Figures used in this guide
- 30
- number of components of the Dow Jones Industrial Average
Each number in the text is a definition, a convention or a stated value of the source, not a market observation.
How Lzzo.com shows it
The Dow Jones page shows the index in points with the time of its last observation and a constituent table of its members, linked to their product pages. The table follows a dated member list; where that list comes from the holdings of an issuing fund, the page says so. The page does not publish the divisor or the price weights of the members.
Related guides
Sources
- S&P Dow Jones Indices, Dow Jones Averages Methodology
- S&P Dow Jones Indices, How the Dow Works
Primary and official sources, named as plain text.