What Is the Dow Jones Industrial Average? - TheStreet Definition

Dictionary of Financial Terms ^DJIA

The mighty Dow. This stock index, first set by Wall Street Journal founder Charles Dow back in 1896, is the litmus paper that the world uses to test the U.S. stock market. Not that it's very good litmus paper -- there are only 30 components in the index that Dow Jones oversees, and they are not weighted by their market capitalization.

Occasionally Dow Jones will fiddle with the index a bit -- when that happens, the stocks being added generally get a boost from their addition to index funds and the like. In 1999, Dow Jones booted Old Economy stalwarts such as Sears and Goodyear in favor of newer names including Microsoft and Intel -- the Dow's first two Nasdaq issues.

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