Mar 08 2011

What is the Dow Jones Industrial Average or DJI?

Category: Finance


Dow Jones Industrial AverageThe Dow Jones Industrial Average, ticker symbol DJIA, is a stock market index that follows the stock prices of 30 publicly traded American companies. The companies within the DJIA are chosen from a cross section of different sectors that includes technology, pharmaceuticals, banking, and industrial, among others. The companies that represent the Dow Jones are chosen by a committee to best represent the market as a whole. Throughout its 100+ year history, the companies within the Dow have changed 48 times. Along with the Nasdaq and S&P 500, the Dow Jones Industrial average is among the most closely watched indices.

Some critics argue that the DJIA is not a very accurate depiction of the overall market condition because it uses a price weighted average. A price weighted average lets higher-priced stocks have a greater influence over the index without regard for market cap or industry size.

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