Dow Jones Industrial Average: What it is and why it matters - Business Insider

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The Dow Jones Industrial Average is one of the most-watched stock index in the world — here's how it works and why it's so influential

. And to understand the Dow, you must understand it's actually two things: a stock market index of 30 chosen companies and a benchmark number.stock market indices in the world. As a constantly changing benchmark number, it's endlessly watched, analyzed, and bet upon. And in both capacities, the Dow acts as a stand-in for the US stock market itself — and a bellwether of the state of the US economy.

Like the shares within it, the Dow's constantly moving. As stock prices fluctuate, the DJIA goes higher or lower. This movement gives investors and traders a way to track the market based on the changing prices of those 30 stocks. The DJIA appears widely on financial and other news websites every day.The DJIA was launched in May 1896 by Charles Dow and his business associate Edward Jones. Both were American journalists, co-founders of Dow-Jones and Company, then a financial news bureau.

Originally, the Dow consisted of just a dozen companies in the gas, sugar, tobacco, railroad, and oil industries. evolved, expanding to 30 companies and including every major industrial sector except transportation, utilities, and real estate.

 

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They only put the high fliers in the Dow 30 to juice their number higher.

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