What is the Dow Jones Industrial Average?

The Dow Jones Industrial Average (DJIA), more simply referred to as the Dow Jones, or the Dow 30, is the world’s oldest and most followed stock market index. The Dow Jones Industrial Average is actually a price-weighted average of 30 some significant stocks traded at the New York Stock Exchange (NYSE) and the NASDAQ.  The Dow Jones index shows how these, public owned companies based in the USA have traded during a standard trading season.

History: As mentioned, the Dow Jones Industrial Average (DJIA) is the oldest stock market index in the market. It is one of the several indices created by Charles Dow, the editor of the renowned Wall Street journal and the co-founder of the Dow Jones & Company (Which is now owned by NewsCorp).     Along with the NASDAQ Composite, the S&P500, and the Russell 2000 Index, the DJIA is one of the closely watched benchmark indices tracking targeted stock market activity.

As online stocks trading is catching up the flavor and becoming the most popular way of trading stocks these days, the performance of Dow Jones index is continuing to be influenced by not only corporate and economic reports but a series of domestic and foreign events like war, terrorism, natural disaster that has the potential to hit the national economy.

The Dow Jones Industrial Average currently includes the following companies:
3M from the Conglomerate industry
ALCOA from the aluminum industry
AMERICAN EXPRESS from Consumer Finance
AT&T from Telecommunication
Bank of America from Banking
Boeing from Aerospace And Defense
CATERPILLAR from Construction And Mining Equipment
Chevron Corporation from Oil & Gas
CISCO SYSTEM from Computer Networking
COCA COLA from Beverages
DuPont from Chemical Industry
EXXONMOBIL from Oil & Gas
General Electric from Conglomerate industry
Hewlett-Packard(HP) from Technology
The Home Depot from Home Improvement Retailer
Intel from Semiconductors
IBM from Computer & Technology
Johnson & Johnson from Pharmaceuticals
JPMorgan Chase from Banking
Kraft Foods from Food Processing
McDonald’s from Fast Food
Merck from Pharmaceuticals
Microsoft from Software
Pfizer from Pharmaceuticals
Procter & Gamble from Consumer Goods
Travelers from Insurance
United Technologies Corporation from Conglomerate industry
Verizon Communication from Telecommunication
Wal-Mart from Retail
Walt Disney from Broadcasting & Entertainment

DJIA and the Performance of the Stock Market:
The Dow Jones Industrial Average (DJIA) is comprised of only thirty firms but it must be brought to your notice that these are thirty large firms whose market capitalization (which means number of shares multiplied by the stock price) is relatively large if compared to other firms. Hence, the performance of the Dow Jones Industrial Average (DJIA) indicates the performance of the broader market. So when someone says, "The Dow is Up", it means the market is doing well.

Apart from being a measure of the stock market performance, the DJIA is useful when you are up to benchmark the performance of a portfolio. People, nowadays, are more prone to investing in stocks and bonds which comprise an index. Those interested in investing in the the broader market may want to consider looking into the ETF SPDR Dow Jones Industrial Average (DIA), which tracks the dow. ETF trading has become enormously popular over the last few years, as there are ETFs for every major stock index world-wide now. Most online brokers allow customers to trade these ETFs.