Which stock-market index is weighted by the share prices of 30 U.S. companies?

The Dow Jones Industrial Average is a stock-market index weighted by the share prices of 30 U.S. companies.

Charles Dow and Edward Jones created the index in 1896, and it remains one of the best-known indicators of U.S. equity-market performance. Despite its name, the Dow is not limited to industrial manufacturers. Its constituents include major companies from several parts of the economy, and the list changes over time.

Unlike a market-capitalization-weighted index, the Dow gives greater influence to companies with higher per-share prices. It uses a divisor to keep the index continuous when companies split shares, pay certain distributions, or enter and leave the index. This means the arithmetic is more complicated than simply averaging the 30 quoted prices.

The Dow’s small number of constituents makes it less comprehensive than broad benchmarks such as the S&P 500. Its long history and familiar name make it influential, but its price weighting is an important distinction when interpreting movements.