Dow Jones Industrial Average
The Dow Jones Industrial Average or ‘Dow’ is an index composed of 30 large cap US companies. The index is cross industry, with its largest weighting as of writing in the financial sector, followed by technology, and healthcare. This is calculated through a price-weighting system, where shares trading at higher prices will have a higher weighting within the index. It is also important to note that the Dow excludes transport and utility firms, with Dow Jones offering sector specific indexes tracking such sectors. Some widely known constituents include Microsoft ($MSFT), Goldman Sachs ($GS), Boeing ($BA), and Coca Cola ($KO).
Similarly, to the Nasdaq 100 and S&P 500, the Dow is a prominent indicator of wider economic health and performance amongst traders. However, it is important to remember the index consists of only 30 large cap listed firm, a small percentage of the market, meaning general representativeness can be conceived as somewhat limited. Large Dow ETF’s include the iShares DJIA ($CIND).