Glossary entry
The Dow Jones Industrial Average tracks 30 established US companies and is commonly called the Dow. It uses price weighting, so a stock's nominal share price influences its contribution more directly than the company's total market value. An adjusted divisor accommodates events such as stock splits, preserving continuity in the index level.
Illustrative example
A one-dollar change in a high-priced constituent and a one-dollar change in a lower-priced constituent have the same direct point effect before other adjustments.
What to consider
Thirty companies offer a limited market sample. The Dow's weighting also differs substantially from capitalization-weighted benchmarks such as the S&P 500.
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