Dow Jones Industrial Average (DJI): What You Need to Know

What is the Dow Jones Industrial Average (DJI)?

The Dow Jones Industrial Average (DJI) is a stock market index that tracks the performance of 30 large, publicly traded companies in the United States. It is one of the oldest and most widely followed stock market indices in the world, and is often used as a barometer of the overall health of the U.S. economy.

History of the DJI

The DJI was created by Charles Dow and Edward Jones in 1896. The original index included 12 companies: American Cotton Oil, American Sugar, American Tobacco, Chicago Gas, Distilling & Cattle Feeding, General Electric, Laclede Gas, National Lead, North American, Tennessee Coal & Iron, U.S. Leather, and U.S. Rubber.

Over the years, the composition of the DJI has changed as companies have been added or removed. The current index includes companies from a variety of industries, including technology, healthcare, financials, and consumer goods.

How is the DJI calculated?

The DJI is calculated by dividing the total market capitalization of the 30 companies in the index by a divisor. The divisor is adjusted whenever a company is added or removed from the index, or when a company issues a stock split.

Importance of the DJI

The DJI is an important economic indicator because it is often used as a barometer of the overall health of the U.S. economy. When the DJI rises, it is often seen as a sign of economic strength. When the DJI falls, it is often seen as a sign of economic weakness.

Conclusion

The Dow Jones Industrial Average is a stock market index that tracks the performance of 30 large, publicly traded companies in the United States. It is one of the oldest and most widely followed stock market indices in the world, and is often used as a barometer of the overall health of the U.S. economy.