How the Dow Jones Industrial Average Is Calculated
What is the Dow Jones Industrial Average?
The Dow Jones Industrial Average (DJIA) is a stock market index that tracks the stock performance of 30 large, publicly traded companies listed on stock exchanges in the United States.
The DJIA was created by Charles Dow and Edward Jones in 1896 and is one of the oldest and most widely followed stock market indices in the world.
How is the Dow Jones Industrial Average Calculated?
The Dow Jones Industrial Average is calculated by dividing the total market capitalization of the 30 companies in the index by the Dow Divisor. The Dow Divisor is a number that is adjusted to ensure that the DJIA is not affected by changes in the number of companies in the index or by stock splits.
As of July 2023, the divisor is 0.151953125.
What are the criteria for inclusion in the Dow Jones Industrial Average?
Companies must meet certain criteria to be included in the Dow Jones Industrial Average.
These criteria include:
*- The company must be a large, publicly traded company listed on a stock exchange in the United States.
- The company must have a long history of profitability.
- The company must be a leader in its industry.
- The company's stock must have a high trading volume.
How often is the Dow Jones Industrial Average updated?
The Dow Jones Industrial Average is updated every business day at the close of the market.
