The Dow Jones Industrial Average (DJIA) is a stock market index comprising 30 prominent companies listed on U.S. stock exchanges. It is one of the oldest and most widely followed equity indices, calculated based on the stock prices of its components rather than their market capitalization.
๐ Index Characteristics
The DJIA is price-weighted, meaning a stock’s price determines its importance in the index. For instance, as of March 2025, Goldman Sachs was the largest component with a market capitalization of approximately $167 billion, while Apple, with a market cap of around $3.3 trillion, was not in the top 10 components.
This index has fewer stocks than many other major indices, which may increase risk due to stock concentration. However, it may also be less volatile during market fluctuations because its components are well-established large-cap companies.
๐ข Calculation Method
The value of the DJIA is calculated by summing the stock prices of its constituent companies and dividing by a factor, approximately 0.162 as of November 2025. This factor is adjusted during stock splits to maintain the index’s value.
๐ Historical Background
First calculated on May 26, 1896, the DJIA is the second-oldest U.S. market index, created by Charles Dow and named after him and Edward Jones. It is maintained by S&P Dow Jones Indices, which includes representatives from both S&P and The Wall Street Journal.
๐ Component Changes
As of November 8, 2024, the DJIA has undergone 59 changes since its inception. General Electric had the longest tenure, being part of the original index in 1896 and remaining until 2018, with multiple re-additions in its early years.
๐ผ Investment Options
Investors can access the DJIA through index funds, mutual funds, and exchange-traded funds (ETFs) that replicate the index’s performance. An ETF that tracks the DJIA is issued by State Street Corporation.
| ๐ | ๐ข | ๐ | ๐ผ |
|---|---|---|---|
| 30 companies | Price-weighted | Founded in 1896 | Index funds available |
| Goldman Sachs largest | Factor ~0.162 | 2nd oldest index | ETFs by State Street |
| Fewer stocks | 59 changes | General Electric longest | Options and futures |
| Less volatility | Dividend yields | Maintained by S&P | Replicates performance |