Dow Jones Industrial Average
Definition
DJIA. The most widely used indicator of the overall condition of the stock market, a price-weighted average of 30 actively traded blue chip stocks, primarily industrials. The 30 stocks are chosen by the editors of the Wall Street Journal (which is published by Dow Jones & Company), a practice that dates back to the beginning of the century. The Dow was officially started by Charles Dow in 1896, at which time it consisted of only 11 stocks. The Dow is computed using a price-weighted indexing system, rather than the more common market cap-weighted indexing system. Simply put, the editors at WSJ add up the prices of all the stocks and then divide by the number of stocks in the index. (In actuality, the divisor is much higher today in order to account for stock splits that have occurred in the past.)
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Related Terms
Dow Jones Averages, Dogs of the Dow, S&P 500
'Dow Jones Industrial Average
' appears in the definitions of these terms on BusinessDictionary.comdiamonds, Dow theory, large capitalization stock, Black Mondays, Dow Jones Averages, and 
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