Dow Jones Industrial Average (DJIA) Overview
One of the followed indices in the world, The Dow Jones Industrial Average (DJIA) tracks the thirty largest, publicly-owned companies traded on the New York Stock Exchange (NYSE and the NASDAQ).
How is the DJIA Calculated?
Higher share price stocks are given a higher weight in the index. Therefore, a more significant percentage move in the higher-priced components has more impact on the final calculated value.
How the DJIA differs from the S&P indices is that it is not a weighted arithmetic average, nor does it represent its component companies market-cap. Instead, it is the sum of the price of one share of stock for all the components, divided by the divisor.
Therefore, a one-point move in any of the component stocks will move the index by an equal number of points.
DJIA = SUM (Component stock prices) / Divisor
The official website can be found here.
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