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Market Structure

Dow Jones Industrial Average

An index of 30 large blue-chip US companies. The oldest and most widely quoted market index, though many traders consider the S&P 500 more representative.

What is the Dow Jones?

The Dow Jones Industrial Average (DJIA, "the Dow") is an index of 30 large, well-established US companies. Created in 1896, it is the oldest continuously published stock market index in the world. When someone says "the Dow is up 300 points," they are talking about this index.

How it differs from the S&P 500

  • Only 30 stocks vs 500 in the S&P. Much narrower view of the market
  • Price weighted: stocks with higher share prices have more influence, regardless of company size. A $500 stock moves the Dow more than a $50 stock, even if the $50 stock has a larger market cap. This is unusual and considered a weakness
  • Blue chips only: all 30 are large, established companies like Apple, Goldman Sachs, UnitedHealth, and Home Depot
  • Less representative: 30 stocks cannot capture the full picture of the US economy the way 500 can

The 30 Dow stocks

The components change over time as the committee adds and removes companies. As of 2025, the Dow includes companies like Apple, Microsoft, JPMorgan, Goldman Sachs, UnitedHealth, Visa, Home Depot, Walmart, Coca-Cola, and Disney. The full list is publicly available.

Why it still matters

  • Media coverage: the Dow is still the number most often quoted in mainstream news. "Dow drops 500 points" makes headlines even though the S&P 500 is a better market gauge
  • Points vs percentage: a 500-point Dow drop sounds dramatic but may only be a 1.2% move. Always think in percentages, not points
  • DIA ETF: you can trade the Dow through the DIA ETF, though it is far less liquid than SPY

Which index should you watch?

  • S&P 500 (SPY): best overall market gauge. Watch this one. See S&P 500
  • Nasdaq (QQQ): best for tech sector direction. See QQQ
  • Dow (DIA): useful as a headline reference but less useful for active trading decisions
The Dow gets the most airtime on TV but the S&P 500 gets the most respect from traders. If you only have room on your screen for one index, make it the S&P 500.

Related Terms

Blue Chip

A large, well-established, financially stable company with a long track record. Examples include Apple, Microsoft, and Johnson & Johnson.

ETF (Exchange-Traded Fund)

A fund that trades on an exchange like a stock, holding a basket of assets such as stocks, bonds, or commodities. SPY and QQQ are ETFs.

S&P 500

An index of the 500 largest publicly traded US companies, weighted by market cap. The most widely used benchmark for overall US stock market performance.