What Is the Meaning of the Dow?

New York Stock Exchange

Stock market and news commentators regularly refer to the Dow when discussing the daily stock market results. The Dow is the most widely followed stock market index.

Identification

Although Dow Jones & Co. manages several stock market indexes, the most widely known and followed is the Dow Jones Industrial Average, or DJIA. When commenters speak of the "Dow," the reference is to the DJIA.

History

The Dow Jones Industrial Average is the oldest index tracking the U.S. stock market. It was started in 1896 by Charles Dow.

Function

The Dow tracks the values of the stocks of 30 large, influential U.S. companies. Components of the Dow include Coca-Cola, Caterpillar, Walmart and IBM.

Potential

Investors can invest in all 30 Dow stocks in the same proportion as the index by buying shares in the Diamond Trust, Series 1 ETF (symbol DIA).

Alternatives

The Dow Jones Industrial Average is an index of only 30 stocks. Investors also frequently follow the S&P 500 index of 500 of America's biggest companies and the NASDAQ Composite, which is heavily weighted in technology companies.

References

• Down Jones Indexes: Dow Jones Industrial Average