Dow Jones Industrial Average (DJIA) Overview
What is the Dow Jones Industrial Average?
The Dow Jones Industrial Average (DJIA) is a widely followed stock market index that measures the performance of 30 of the largest U.S. publicly traded companies. It is one of the oldest and most well-known stock market indices in the world.
History of the DJIA
The DJIA was created in 1896 by Charles Dow and Edward Jones, founders of the Dow Jones & Company financial news organization. At the time, it included 12 companies, but it has expanded over the years to its current composition of 30 companies.
The DJIA is calculated by adding up the share prices of the 30 companies and dividing by a divisor that adjusts for stock splits and other corporate actions. The divisor is currently set at 0.1519543266250712.
The DJIA is a price-weighted index, which means that the share prices of the 30 companies are given equal weight in the calculation of the index. This can give the DJIA a bias towards large-cap companies, as they have higher share prices.
Importance of the DJIA
The DJIA is one of the most widely followed stock market indices in the world. It is used as a benchmark against which other stock market indices are compared, and it is often seen as a barometer of the overall health of the U.S. stock market.
The DJIA is also used by investors to make investment decisions. Many investors use the DJIA as a guide for their own investment portfolios, and some even invest directly in the DJIA through index funds or exchange-traded funds (ETFs).
Conclusion
The Dow Jones Industrial Average is a widely followed stock market index that measures the performance of 30 of the largest U.S. publicly traded companies. It is one of the oldest and most well-known stock market indices in the world, and it is often seen as a barometer of the overall health of the U.S. stock market. The DJIA is used by investors to make investment decisions, and it is also used as a benchmark against which other stock market indices are compared.
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