Web Trader MT5
Dow Jones Industrial Average is the most quoted stock market figure in the world, as well as one of the most misconstrued. The Dow Jones Industrial Average is an index of 30 large American companies listed on the New York Stock Exchange and Nasdaq, names like Apple, Goldman Sachs, Boeing, and Coca-Cola.
It has been operating in one form or another since 1896, and that is one of the main reasons it receives as much airtime as it does. The methodology, however, is odd by modern standards.
The Dow, unlike most major indices, is price-weighted rather than market-cap weighted. Thus, a company with a higher share price has more influence on the index, even if it is much smaller.
That is an artifact of how indices were computed before the advent of computers. No serious analyst relies on the Dow as his main gauge of the market; the S&P 500 is much more indicative of what is going on in the market, but it remains the number that displays on the television screens when the markets are having a big day.
Example: When the Dow goes down 800 points in a session, the headline writes itself. What that number actually represents in percentage terms, normally something between 2% and 3%, is what most broadcasts omit, but it is what actually counts.
