Why is it Important to Know the Dow Jones?

The Dow Jones Industrial Average (DJIA) benchmarks 30 big, publicly traded blue chip businesses on the New York Stock Exchange and NASDAQ.

[{"selector":"#anim-ce6d3571-7ee4-4440-8f2b-aeea7216c0bc","keyframes":{"opacity":[1,1]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-8e4ab26c-ae2b-4d7a-a1c5-993260163d24","keyframes":{"transform":["scale(3)","scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] Photo: Pexels.com

Charles Dow, Wall Street Journal co-founder, invented it in 1896 to measure stock market performance.

[{"selector":"#anim-cc9ac416-b38f-4316-8082-c8ea0e1be3d1","keyframes":{"opacity":[1,1]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-22dbe656-a567-4a3d-8391-8d3a5403b1a2","keyframes":{"transform":["scale(3)","scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] Photo: Pexels.com

The 30 Dow firms are industry leaders and represent the U.S. economy.

Price-weighted indexes are based on the stock prices of its 30 components. Highly priced stocks are weighted.

Although the S&P 500 index measures a wider market segment, the Dow remains a leading stock market barometer.

Financial media report Dow fluctuations as instant indicators of market emotion and economic health.

Major news, earnings, and business changes from the 30 Dow corporations can affect the index's value.

Despite being less scientifically weighted than the S&P 500, the Dow's limited roster of titans makes it more subject to price movements.

As corporations merge, buy, decline, or grow large enough to join the Dow, its composition changes.

Investors can gauge America's industrial health and economy through the Dow Jones' daily gains and losses.