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The Dow Jones indices - statistics & facts

The Dow Jones indices, published by the joint venture company S&P Dow Jones Indices, are among the most popular indicators of trends on global stock markets. In particular, the Dow Jones Industrial Average index (DJIA) is one of the most important and widely traced indices in the world. Often shortened to ‘the Dow’, the DJIA was founded in early 1885 by Wall Street Journal editor and businessman Charles Dow, making it the second oldest market index in the United States. It is a price-weighted index including thirty of the largest publicly traded U.S. companies. Following a major crash in March 2020 owing to the global coronavirus (COVID-19) pandemic, the value of the DJIA recovered to its pre-pandemic levels by November 2020.

Who is included in the Dow Jones Industrial average?

Contrary to common belief, the DJIA does not contain the 30 largest publicly listed U.S. companies. Rather, the index’s constituent companies are selected by a committee, with there being no formal rules for inclusion. This means the Dow includes a variety of large, respected companies across a range of sectors, covering diverse household names like Apple, Microsoft, Coca-Cola, McDonalds, Nike, Disney, Goldman Sachs and Walmart. The lack of precise inclusion guidelines means that there can be quite a difference between the best performing companies on the Dow, and the worst performing companies on the Dow. This - along with the low number of companies included and the use of price weighting rather than total market capitalization - has led some to criticize the Dow as an inaccurate measure of the overall economy. Such critics argue that a broader index with clear inclusion criteria such as the S&P 500 (which includes the 500 largest U.S. companies by market capitalization) are better indicators of broader economic trends. Despite this criticism, the Dow remains one of the most prominent and popular U.S. stock market indices.

What other indices are published by Dow Jones?

In addition to the headline index, Dow Jones tracks other stock groups. The Dow Jones Composite Index is composed of 65 leading U.S. companies: 30 stocks forming the Dow Jones Industrial Average index, 20 stocks from the Dow Jones Transportation index and 15 stocks from the Dow Jones Utility Average index. Each of these gives analysts a better view of specific segments of the market, helping them understand how the entire economy is progressing. Other indices, such as the Dow Jones Sustainability World Index, follow criteria such as environmental sustainability or social matters. Such an index helps investors support the causes about which they care.

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