Which market benchmark represents 30 major U.S. companies and uses share prices to determine its weighting?

The Dow Jones Industrial Average is the U.S. market benchmark representing 30 major companies and using share prices to determine its weighting.

Charles Dow created the average with statistician Edward Jones and editor Charles Bergstresser. The first version appeared in 1896 and contained 12 companies. It expanded to 20 companies in 1916 and reached its current 30-company composition in 1928, although the members have changed repeatedly.

Unlike the market-capitalization weighting used by indexes such as the S&P 500, the Dow is price-weighted. A higher-priced share therefore has more influence on the index’s point movement than a lower-priced share, regardless of the companies’ total market values. A divisor is adjusted for stock splits and other corporate actions so those events do not create artificial index changes.

The Dow is widely reported, but its 30 companies are not the entire U.S. stock market. The average is also not a direct investment. Funds can track it, while investors can buy its constituent shares individually.