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August 1, 2026Short & citedBlog
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Money & Work • Stock Market

Dow Jones Industrial Average

The Dow Jones Industrial Average (DJIA), commonly called the Dow, is a U.S.

Updated August 1, 20261 min readCited sources

The Dow Jones Industrial Average (DJIA) is a U.S. stock market index of 30 prominent companies. It is one of the oldest and most widely followed benchmarks for U.S. markets.

What it is

The Dow tracks 30 large, established U.S. companies across major industries. It is price-weighted, meaning higher-priced stocks have more influence on the index. The index is maintained by S&P Dow Jones Indices and was created in 1896 by Charles Dow and Edward Jones.

How it works

The Dow is calculated by adding the share prices of its 30 components and dividing by a divisor. The divisor is adjusted for stock splits and other corporate actions to keep the index comparable over time. This price-weighted method differs from market-cap-weighted indexes like the S&P 500.

Why it matters

The Dow is widely used as a headline indicator of U.S. stock market performance and business sentiment. For Canadian readers, movements in the Dow can influence sentiment on Canadian stocks and broader North American markets, making it a key reference in financial news.

In short

  • Tracks 30 blue-chip U.S. companies.
  • Price-weighted index; higher-priced stocks have more influence.
  • Maintained by S&P Dow Jones Indices since 1896.
  • Often used as a snapshot of U.S. market direction.
Canadian angle

Canadian readers often encounter the Dow in financial news as a headline indicator for U.S. and global markets, since movements in the index can influence sentiment on Canadian stocks and broader North American markets.

Quick questions

What is the Dow Jones Industrial Average?
It is a U.S. stock market index made up of 30 prominent publicly traded companies, commonly used to gauge overall market performance.
How is the Dow calculated?
It is calculated by adding the share prices of the 30 component stocks and dividing by a divisor that is adjusted for splits and other corporate events.
What is the difference between the Dow and S&P 500?
The Dow tracks 30 companies and is price-weighted, while the S&P 500 tracks 500 companies and is market-capitalization-weighted.

Sources

  1. Wikipedia — https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average
    Supports: Defines the Dow Jones Industrial Average as a stock market index of 30 prominent U.S. companies.
  2. Britannica Money — https://www.britannica.com/money/Dow-Jones-average
    Supports: States that Dow Jones averages are maintained by S&P Dow Jones Indices and are widely used indicators of U.S. stock trends.
  3. Fidelity — https://www.fidelity.com/learning-center/smart-money/what-is-dow-jones
    Supports: Explains that the Dow tracks 30 large U.S. companies, is price-weighted, and is one of the three major U.S. indexes.
  4. Investopedia — https://www.investopedia.com/articles/investing/082714/what-dow-means-and-why-we-calculate-it-way-we-do.asp
    Supports: Explains the price-weighted calculation method and use of a divisor.
  5. FOREX.com — https://www.forex.com/en-us/glossary/dow-jones-industrial-average/
    Supports: States that the index was created by Charles Dow and Edward Jones in 1896 and is price-weighted.
  6. TheStreet — https://www.thestreet.com/dictionary/dow-jones-industrial-average
    Supports: Explains the Dow's calculation, its price weighting, and the origin of its name.