Glossary
Dow Jones: meaning, example and why it matters
The Dow Jones Industrial Average: a price-weighted index of 30 large US companies. Because it is price-weighted, a higher share price means a bigger influence, regardless of company size.
Worked example
In a price-weighted index, a stock at $400 and one at $100 are weighted by price: a 1% move in the $400 stock changes the index four times as many points as a 1% move in the $100 stock, whatever the size of the companies.
Illustrative numbers for explanation only. They are not market data, a forecast or a suggestion.
Why it matters
Price weighting makes the Dow behave differently from indices weighted by company size.
Related terms
Frequently asked questions
Is the Dow the best summary of the US market?
It covers only 30 companies and is price-weighted, so broader indices like the S&P 500 are used more often as a benchmark.
Is this page investment advice?
No. Dow Jones is explained in general terms with illustrative numbers. Market Dekho is not a SEBI-registered Research Analyst or Investment Adviser.
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Educational content, not investment advice. Market Dekho is not a SEBI-registered Research Analyst or Investment Adviser. Spotted a mistake? Email marketdekho01@gmail.com.