The Dow Jones Industrial Average (the "DJIA" or simply "the Dow") is a stock market index that tracks 30 large, well-known US companies. When the news says "the market was up 200 points today," they're usually talking about the Dow.
The basics
An index is a single number that summarizes the performance of a group of stocks. The Dow's job is to give a quick read on how 30 of America's most established public companies — its "components" — are doing as a group. Because those companies span industries from technology and finance to healthcare and consumer goods, the Dow is widely used as a shorthand for the health of the broader US stock market.
A short history
The Dow was created in 1896 by Charles Dow, co-founder of The Wall Street Journal and Dow Jones & Company. It originally contained just 12 companies, mostly industrial firms — hence "Industrial Average." It expanded to 30 components in 1928 and has been maintained at 30 ever since, with the lineup changing over time as the economy evolves.
The 30 components
Today's Dow includes household names such as Apple, Microsoft, Coca-Cola, JPMorgan Chase, and Walmart. Companies are selected by a committee to represent leading US industries; they are not chosen by a fixed formula. When a company no longer fits, it is replaced. You can see the current lineup on our Dow 30 components page.
What makes the Dow unusual
Unlike most modern indices, the Dow is price-weighted: a company's influence depends on its share price, not its overall size. A stock trading at $500 moves the Dow more than one trading at $50, regardless of which company is actually larger. This is different from the S&P 500, which is weighted by market capitalization. We explain the math on our how the DJIA is calculated page.
How to read "points" vs. "percent"
The Dow is quoted in points (e.g., 39,000). A move of "300 points" sounds dramatic, but what matters is the percentage change. A 300-point move on a 39,000 Dow is less than 1% — a fairly ordinary day. Always check the percent change to gauge how significant a move really is.
Dow vs. S&P 500 vs. Nasdaq
- Dow Jones Industrial Average — 30 blue-chip companies, price-weighted.
- S&P 500 — 500 large US companies, weighted by market value; a broader gauge.
- Nasdaq Composite — thousands of stocks listed on the Nasdaq exchange, heavily weighted toward technology.
Each tells a slightly different story, which is why our homepage shows all of them side by side.
This article is educational and is not financial advice. See our Disclaimer.