The Dow Jones Industrial Average (DJIA) is a price-weighted index of 30 prominent U.S. blue-chip companies. Created by Charles Dow in 1896, it is the oldest and most recognized stock market index in the world.

Why It Matters

Despite covering only 30 stocks (vs. 500 in the S&P), the Dow remains the most cited index in mainstream media. Its components are hand-selected by a committee and represent major industry leaders including Goldman Sachs, UnitedHealth, Microsoft, and Apple.

Price-Weighted Methodology

Unlike the S&P 500's market-cap weighting, the Dow is price-weighted—stocks with higher share prices have more influence regardless of company size. This makes it less representative of the broader market.

Market Impact

Dow milestones (crossing 40,000, etc.) generate significant media attention and influence retail investor sentiment. It serves as a quick sentiment gauge for non-financial audiences.