Dow 30, also known as the Dow Jones Industrial Average (DJIA), is a stock market index that measures the performance of 30 prominent companies listed on stock exchanges in the United States. It is one of the oldest and most widely followed equity indices in the world, used to gauge the health of the US economy and stock market.
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It includes major companies from various industries except transportation and utilities.
The index is price-weighted, meaning companies with higher stock prices have more influence on the index's movement.
The composition of the Dow 30 can change; companies are added or removed based on their financial stability and overall impact on the economy.
Historical performance of the Dow 30 shows long-term growth but includes periods of significant volatility.
Review Questions
What does it mean for an index to be price-weighted?
How often can the composition of the Dow 30 change?
Why is the Dow Jones Industrial Average considered a key indicator of economic health?
Related terms
S&P 500: A stock market index that measures the performance of 500 large companies listed on US stock exchanges.
NASDAQ Composite: An index that includes all domestic and international stocks listed on the NASDAQ stock exchange.
Stock Market Index: A statistical measure that shows changes occurring in a selected group of important stocks representing a portion of the overall market.