The Dow Jones Industrial Average is made up of 30 companies. It is a price-weighted index of prominent U.S.-listed businesses, so a company’s share price—not its market capitalization—determines its influence on the average.
Charles Dow created the first version of the average in 1896, when it contained 12 industrial companies. The index expanded to 20 stocks in 1916 and reached its modern total of 30 in 1928. Despite its name, the Dow is no longer limited strictly to industrial manufacturers; its constituents span technology, finance, health care, consumer goods, entertainment and other sectors.
The Dow is maintained by S&P Dow Jones Indices, and a committee chooses its constituents rather than applying a simple ranking formula. It is therefore different from the S&P 500, which contains about 500 companies and is weighted by market capitalization. The Dow’s divisor is adjusted for stock splits and constituent changes so those mechanical events do not create artificial jumps in the index.