DOW JONES AVERAGE Meaning and
Definition
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The Dow Jones Average, also known as the Dow Jones Industrial Average (DJIA), is a widely recognized stock market index that serves as a benchmark for the overall performance of the United States stock market. It was created by Charles Dow and his business partner Edward Jones in 1896 and is named after them. The Dow Jones Average is considered one of the oldest and most prominent stock market indices.
Composed of 30 large, publicly traded companies listed on major U.S. stock exchanges, the DJIA represents various sectors of the economy. These companies are chosen by the editors of The Wall Street Journal, which is owned by Dow Jones & Company. The Dow Jones Average is a price-weighted index, meaning that the components are weighted according to their stock prices rather than market capitalization.
The DJIA is widely followed by investors, analysts, and financial professionals as it provides them with a snapshot of the general state of the stock market. Fluctuations in the Dow Jones Average are often seen as indicators of market trends and investor sentiment. An increase in the index indicates overall rising stock prices, while a decline suggests falling prices.
Overall, the Dow Jones Average serves as an essential measure of the stock market's performance, providing a gauge of investor confidence and market conditions, making it a major reference point for financial decision-making.
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