What is the Dow Jones Index?

The Dow Jones Index is one of the most widely-known financial indices in the world today. It plays a big role in the financial markets and if you’re an investor, you should be aware of how it works.

The Dow Jones Industrial Average or Dow Jones Index is one of the most widely known financial indices in the market today and has been for many years. Investors always talk about “The Dow” when referring to the performance of the market in general. The Dow Jones Index was created by a Wall Street Journal editor named Charles Dow in 1896. It is named the Dow Jones index after Dow and his friend Edward Jones.

How the Dow Jones Index Works

Dow Jones Index Chart

Dow Jones Index Chart

The Dow is a financial index, meaning that it is a compilation of the performance of a number of stocks. The Dow Jones is based on 30 of the biggest publicly-traded companies in the United States. At one time, it only included stocks of companies that were in the industrial sector, but today it has little to do with industrial companies. Now it is simply an index that looks at 30 of the biggest companies in the United States market.

Today the Dow is made up of companies like Walt Disney, Bank of America, AT&T and Coca-Cola. Each day, the Dow Jones value is calculated based on the values of companies that are included in the index. This gives investors a general feel for how the market has performed as a whole. Since the rest of the market tends to follow the performance of the biggest companies, this gives investors an idea of what is happening in the stock market in general. Along with the NASDAQ composite and the S&P 500, the Dow is one of the most commonly used indicators in the market today.


Although the Dow Jones is very important to most investors, it is not indicative of the performance of every stock. Some stocks could do well even if the Dow Jones index performs poorly over a period of time. As an investor, it is simply one tool that you can use on a regular basis to aid in making decisions.