Dow Jones Industrial Average

The Dow Jones Industrial Average, usually shortened to the Dow, is a stock market index that tracks 30 large, well-established American companies, selected by a committee to represent a broad cross-section of the economy. Created in 1896, it is one of the oldest stock market indexes still in use today.

Unlike the S&P 500, which is weighted by market cap, the Dow is weighted by share price, so a company with a higher stock price has more influence over the index regardless of how large the company actually is. With only 30 companies included, it is also a much narrower snapshot of the market than a broader index.

Despite those limitations, the Dow remains deeply embedded in financial news and everyday conversation simply because of how long it has been around, even though most investors and economists consider the S&P 500 a more accurate gauge of the overall market.