UK Accounting Glossary
The Dow Jones Industrial Average or simply the Dow is a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States.
The DJIA is a price-weighted average, meaning a $70 stock has more impact on the DJIA than a $30 stock. The DJIA is composed up of 30 large, well-known, industrial stocks that are generally industry leaders and trade daily on the New York Stock Exchange or Nasdaq. The DJIA is used as an overall indicator of market performance, but some criticize it for not being representative of the stock market as a whole due to its concentration in just 30 stocks. The DJIA is one of several stock market indices created by Wall Street Journal editor and Dow Jones & Company founder Charles Dow in 1896. Dow compiled the DJIA as a way to measure the performance of the industrial component of America’s stock markets. The DJIA is quoted in points, not dollars.
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This glossary post was last updated: 9th February 2020.