West Texas Intermediate (WTI) futures opened at $59.59 per barrel (bbl) on November 6, 2025. Both benchmarks remain closely watched gauges of global energy supply and demand. Investment decisions should be based on an individual’s own goals, time horizon, and tolerance for risk.
Use our screener to identify ETFs and ETPs that match your investment goals. These latest changes mark just the 53rd adjustment to the DJIA since its inception in 1896 and highlight a shift toward companies that are more relevant in their respective industries.
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- These figures below represent the average annual returns and percentage changes of the DJIA during each respective year.
- For instance, a company may be removed from the index when its market capitalization drops because of financial distress.
- But remember, a rise in the index may be because of a substantial rise in the share price of a single company that can outweigh the fall in the share prices of a few of the other stocks.
- Here’s a table showcasing the historical average percentage returns of the Dow Jones Industrial Average (DJIA) for selected example periods.
What Is the Dow Jones Industrial Average?
Over the long term, this performance reflects the overall growth of the U.S. economy and the strength of its major corporations. The composite average is designed to offer a broader stock market snapshot than the three component averages. However, another index published by S&P Dow Jones Indices—the market-cap-weighted S&P 500—is widely regarded as the chief benchmark for the U.S. stock market.
Investors and analysts use the Dow to gauge market trends and economic confidence. Changes in the index’s composition reflect shifts in the economy, showcasing the evolution of leading industries and corporations. To calculate the index, Dow added up the stock prices of the 12 companies and divided the total by 12. These different U.S. indices offer investors a more comprehensive and nuanced view of the stock market, allowing for analysis and benchmarking across various segments and industries.
Welcome to Investing.com’s comprehensive guide on the Dow Jones Industrial Average (also called “the Dow Jones”, “the Dow”, “US 30” and the “DJIA”), one of the most prominent U.S. stock market indices. This authoritative, comprehensive guide to the US 30 will shed light on the Dow Jones, its relationship with other indices, its historical background, and its impact on the economy. Because the Dow Jones Industrial Average condenses top companies’ performance into one number, investors get a quick and easy-to-understand view of what’s happening in the US stock market. It’s called the Global Dow, and it tracks the performance of 150 companies from international markets. Although it was also created by the Dow Jones company, the Dow, their flagship US index, only includes 30 domestic stocks. The Dow Jones Industrial Average is a price-weighted average, meaning that higher-priced stocks have a greater effect on the DJIA number.
While the Dow Jones serves as a prominent index, considering these other indices provides a broader perspective on market performance and investment opportunities. The DJIA is the second-oldest U.S. market index after the Dow Jones Transportation Average. The DJIA was designed to serve as a proxy for the health of the broader U.S. economy.
Key data points
Copyright © 2025 FactSet Research Systems Inc.Copyright © 2025, American Bankers Association. SEC fillings and other documents provided by Quartr.© 2025 TradingView, Inc. The Dow Jones Industrial Average reached an all-time high on Nov. 6, 2024, closing the trading day at 43,778.78.
Carolyn has more than 20 years of writing and editing experience at major media outlets including NerdWallet, the Los Angeles Times and the San Jose Mercury News. Money market mutual funds are funds based on low-risk investments in short-term, high-quality debt. They’re highly liquid, earn better returns than savings accounts and are often used in brokerage accounts as a “sweep” vehicle for uninvested cash. The S&P 500® also tracks the performance of large US companies, but it includes roughly 500 stocks, some of which overlap with Dow stocks. Since the S&P 500 has more stocks, it provides a broader view of the entire market. In the early 20th century, the performance of industrial companies was typically tied to the overall growth rate in the economy.
History of the Dow averages
The Dow Jones is not physically based in a specific location as it exists as a virtual index. However, Dow Jones & Company, the publisher of the index (alongside other financial publications), is headquartered in the United States, with its main offices in New York City. By the end of this article, investors will be equipped with the relevant knowledge and insights to navigate the DJIA with confidence. Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Once you decide what to invest in, decide how much money you’d like to invest and buy the investment.
By 1896, the company was also computing a daily industrials average using a list of 12 stocks representing key industries such as agriculture, coal, oil, and steel. Like the railroad index, the industrial average was calculated by simply adding together the prices of the 12 stocks and dividing the total by 12. In 1929, Dow Jones added a utilities index, and in 1934, the company began publishing a “composite” average, calculated from the closing prices of all of the stocks in the three indexes. Throughout this article, we explored various aspects of the Dow Jones Index, including its definition, differences from other indices, historical significance, and components. We also delved into its calculation methodology, eligibility criteria, and investment opportunities.
- Since the S&P 500 has more stocks, it provides a broader view of the entire market.
- The DJIA is simply a reflection of the weighted average of the stock prices and can be considered a price in itself.
- The Dow Jones Index (now also known as the Dow Jones Industrial Average (DJIA) or simply the Dow) was created using a straightforward methodology that Charles Dow devised himself.
- Dow Jones & Company, a financial news publisher, was founded in 1882 by Charles Henry Dow and Edward D. Jones.
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Previously, he was a contributing editor at BetterInvesting Magazine and a contributor to The Penny Hoarder and other media outlets. Though the Dow is frequently cited in the press, you will be more diversified if you invest in a broader index, such as the S&P 500 or the Russell 3000 (which includes mid- and small-cap stocks). Investors can expect ups and downs along the way, but the Dow has a track record of steady long-term gains.
It is used as a benchmark for many investments and is considered to be a gauge of the American economy. Back in 1896, Charles Dow simply Direct listing vs ipo added up the prices of the 12 stocks and divided them by 12. In 1923, Arthur “Pop” Harris was assigned the task of calculating these numbers. After his retirement in 1963, computers were used to calculate the figures. Let Britannica Money introduce you to the world of stock indexes, how they’re used as financial benchmarks, and how to get started as an index investor.
What companies are in the Dow Jones?
This calculation ensures that changes in the price of any individual component do not disproportionately impact the index. In the Dow Jones, stocks with higher prices have a greater impact on the index’s movements. Therefore, a higher-priced stock will have a larger weight in the index compared to a lower-priced stock, regardless of the market value of the company.
Individuals can invest in the Dow, which would mean gaining exposure to all of the companies listed in it, through exchange-traded funds (ETFs), such as the SPDR Dow Jones Industrial Average ETF (DIA). The largest single-day percentage drop in the DJIA was on Oct. 19, 1987, when the index dropped over 20%. The second-largest decline occurred on March 16, 2020, when it dropped 12.9%. Not surprisingly, these drops coincided with times of financial instability in the U.S. It’s important to note that the selection process for the Dow Jones is subjective and determined by the index committee. The committee reviews potential candidates and evaluates their eligibility based on the criteria above.
Although it only includes a fraction of the thousands of companies on U.S. exchanges, the Dow is often used as a snapshot of the broader economy’s health. In the fast-paced world of investing, understanding key market indices is essential for making informed decisions and maximizing returns. Among the most renowned indices, the Dow Jones stands tall as a symbol of market performance and economic vitality. As investors, it is crucial to have a comprehensive grasp of the Dow Jones and its significance within the global financial landscape. This index starts by looking at the Russell 3000, which lists 3,000 US companies that represent almost all of the investable equity market.
The Dow Jones Industrial Average (DJIA) tracks thirty of America’s biggest and most established companies, acting like a quick temperature check of the U.S. economy. Erika Rasure is globally-recognized as a leading consumer economics subject matter expert, researcher, and educator. She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest.
Overall, a rise in the Dow signifies a rise in the share prices of constituent companies that reflect a positive outlook and vice versa. At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has more than doubled the S&P 500 with an average gain of +23.93% per year. Zacks Rank stock-rating system returns are computed monthly based on the beginning of the month and end of the month Zacks Rank stock prices plus any dividends received during that particular month. A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return.