The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 leading US blue-chip stocks. Dating back to 1896, it is the oldest stock index still in use.
The Dow Jones Industrial Average (DJIA) is a stock index of 30 large, well-established U.S. blue-chip companies. Created by Charles Dow in 1896, it is one of the oldest equity indexes in the world and is now maintained by S&P Dow Jones Indices. Unlike most major benchmarks, it is price-weighted, meaning stocks with higher share prices move the index more than larger companies with lower share prices. Despite its narrow membership, its long history and name recognition make it one of the most widely quoted symbols of the U.S. stock market.
The Dow is best read as a gauge of large, established U.S. companies, with a tilt toward traditional industry and consumer businesses. Because it is price-weighted, a high-priced stock can sway the index far more than its economic size warrants, so index moves do not always match the broader market. For that reason, analysts usually read the Dow alongside the S&P 500 rather than on its own. Comparing the Dow's performance with the tech-heavy Nasdaq can indicate whether market leadership favors value-oriented or growth-oriented stocks.
The Dow responds to the earnings and dividends of its 30 members, U.S. interest rates, and the broader business cycle. Its relatively heavy weighting toward industrials, financials, health care, and consumer names makes it sensitive to manufacturing activity and household spending. A strong dollar can pressure the overseas revenues of its multinational members, so exchange rates matter as well. Useful cross-checks include the S&P 500, the Russell 2000, and business-cycle indicators such as the ISM manufacturing index.