Dow Jones Industrial Average (DJIA)

The Dow Jones Industrial Average (DJIA) index is a measure of the 30 largest U.S. stocks and companies

The DJIA is an industry weighted average of thirty carefully picked stocks that over time have come to be the benchmark of the nation’s economy. The 30 companies that make up this index meet certain standards that are determined by the Dow Jones’ financial analysts, such as, a history of stable earnings or large market capitalization.

This idea was first written down in 1896 by Charles Dow as a couple of simple averages. Within a few decades, these averages came to serve its current purpose, and the entire financial world relies on these calculations. These calculations essentially are an average of the entire market capitalization, so back in the day the index consisted of twelve companies and their market values combined were divided by twelve. Presently, however, these companies engage in strategic maneuvers that change their market value and complicate calculations, therefore, the divisor is no longer twelve, as a matter of fact it was 0.1255 at the end of 2008. The Dow Jones also preserves continuity and relevance by changing the companies according to the shifts in the most prevalent industries; from railroads and steel to technology industries.

All Dow Jones Stocks

See Also: DJIA Index Analysis