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Dow JonesCreated in 1896, the Dow Jones Industrial Average is one of the world’s oldest and most widely recognized stock indexes—a measure tracking the stock performance of a selected group of companies.
Originally designed to track America’s leading industrial firms, the Dow has evolved into a cultural and financial shorthand for the health of the US economy. As of 2025, it measures 30 major companies (called components) across sectors such as technology, healthcare, finance, and consumer goods.
Unlike most modern indices, which are weighted by the total value of a company’s shares, the DJIA uses a price-weighted formula—meaning stocks with higher share prices exert more influence, regardless of company size. The DJIA has been updated 59 times since its creation to reflect changes in the US economy. Companies can be removed if they decline in relevance, merge or are acquired, or no longer represent the sectors the index aims to capture.Explore Dow Jones
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The Dow Jones Industrial Average vs. the S&P 500: Which one is a better representation of the economy?The Dow and S&P 500 are both indexes meant to provide a broad representation of the economy. The Dow has 30 companies and is weighted by share price, while the S&P 500 has 500 different companies weighted by market capitalization. Since the indexes are so different, investors don't always agree on which index is a better representation of the economy—though the two move in the same direction more than 90% of the time. TheStreetThe Dow Jones Industrial Average was created in the aftermath of a financial crisisCharles Dow introduced the index in 1896, following the Panic of 1893—a severe economic downturn. The DJIA offered investors a straightforward tool to track recovery and gauge the health of America’s emerging industrial economy. History DailyThe Dow Jones Industrial Average was created in 1896Charles Dow introduced the DJIA on May 26, 1896, as a simple average of 12 industrial stocks. Although it became the nation’s most enduring market index, none of its original companies remain in the Dow today. Library of CongressThe Dow Jones & Company began as a small news service in 1882Founded in 1882 by Charles Dow, Edward Jones and Charles Bergstresser, Dow Jones & Company started with hand-delivered market bulletins. Today it’s a global financial news giant, best known for publishing The Wall Street Journal. Dow JonesThe Dow Jones Industrial Average is a stock market indexThe Dow Jones Industrial Average tracks 30 large U.S. companies from all major U.S. sectors except for utilities and transportation. It's considered a bellwether of the U.S. economy. InvestopediaIf you'd invested $1K in Apple stock in 2005, you'd have roughly $130K as of 2025Over the past 20 years, Apple stock generated an annualized total return of about 27.6%. Learn more about how those numbers came to be in this article. KiplingerCritics argue the Dow no longer reflects the modern economyWith only 30 companies and a price-weighted formula, skeptics say the DJIA underrepresents vast sectors of the market. They claim it is outdated, though its close correlation with the broader S&P 500 keeps it relevant. EntrepreneurThe S&P 500, managed by the same company, is another major stock indexAlso run by S&P Dow Jones Indices, the S&P 500 tracks 500 large US firms using market-value weighting. Many analysts view it as a more accurate gauge of the American economy. SP GlobalSee every company in and out of the Dow since 1928The index has had 30 companies since 1928. See each company’s tenure on the index and what firms were added or replaced by year and industry. Visual CapitalistDow components are chosen by a committee, not a formulaUnlike many indices, the Dow has no strict rules for inclusion. A small committee at S&P Dow Jones Indices uses judgment—favoring companies with strong reputations, steady growth, and broad investor interest. Yahoo FinanceIn 1999, Microsoft and Intel’s addition signaled the information tech era for the DowMicrosoft and Intel became the first information technology firms added to the DJIA. Their inclusion marked a turning point—the digital revolution and tech began to drive the American economy. BBC NewsEven iconic companies can get dropped from the DowThe Dow’s lineup evolves as the economy changes. General Electric, part of the original 1896 index, was removed in 2018, after 122 years. ExxonMobil, once the world’s largest company, was replaced by Salesforce in 2020. InvestopediaThe Dow Divisor keeps the index consistent through timeTo adjust for stock splits, mergers, and replacements, the DJIA uses a figure called the Dow Divisor. Originally valued around 12 in 1896, and now less than one, it ensures today’s index levels remain comparable with the past. Corporate Finance InstituteDow Theory laid the groundwork for modern market analysisDeveloped by Charles Dow in the late 19th century, Dow Theory argued that markets move in trends. Its principles—confirmation, trends and volume—still influence technical analysis today. InvestopediaThe Dow remains a shorthand for America’s economic healthFor over a century, the Dow Jones Industrial Average has been one of the most closely watched market barometers. Its rises and falls dominate headlines and politics, shaping how Americans perceive the strength of their economy. MarketWatchStock indexes track markets through groupings of companiesA stock index measures the performance of selected companies, offering a snapshot of market trends. Examples include the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite. WhyzeThere are monthly dividend ETFs that pay you to hold them Traditional dividend stocks and funds pay out quarterly, or four times a year. A select group of stocks and funds pay out monthly, putting cash in investors’ hands 12 times a year. These monthly dividend funds are popular because their regular payouts can help keep budgets on track. InvestopediaWhat a $1K investment in P&G stock 20 years ago would be worth todayIf someone put $1K into P&G stock 20 years ago, it would be worth about $5.2K in 2025, making its annualized return about 8.6%. For context, the S&P 500 has had an annualized return of 10.7% over the same time period. KiplingerA stock market timelineThe stock market has come a long way since the 1600s, when the first version of a stock exchange was created in Amsterdam. Mile markers along the way include everything from the Dow Jones Industrial Average's creation in 1896 to the stock market woes during the COVID-19 pandemic in 2020. SoFi
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