Most investors are aware of the importance of Dow Jones Industrial Average. Even if you are not confident about the finer aspects of the same, that is perfectly okay. Here we will go through in brief, few of the vital aspects of the same.
Dow Jones Industrial Average- Overview
Dow Jones is also known as just “Dow”. It is a stock market index. There are 30 publicly traded companies that determine the Dow index on any given day of trading. The index is the average of how these 30 companies perform. When you hear about Dow news, it is basically how these 30 companies have performed on any given day of trading. Also, it implies the overall health of the stock market.
What is the price of the Dow?
The Dow Jones Industrial Average (DJIA) index dropped 8000 points between the period February 12 and March 11th, 2020. However, ever since the index has bounced back to 27848 points as of November 4th, 2020.
It may be mentioned here that just before the coronavirus struck the globe, the DJIA index was recorded at 29,000 points. Following the pandemic and just prior to it, other indices dropped too. These include Nasdaq Composite and S&P 500.
Why the “Dow matters”?
Since the Dow “monitors” the performances of 30 publicly traded companies in the United States, the outcome of the performance of these companies can indicate how strong the domestic economy is.
Investors usually choose to invest in stocks, the performance of which is good and promising. However, when you see the US markets today or for that matter any other stock market across the globe, you will find that due to the uncertainty that the pandemic has caused, investors are not very sure about parting with their hard-earned money.
The creator of DJIA is Charles Dow. The first Dow stock index was “devised” by him in the year 1884. The Dow Jones Industrial Average has proved to be a driving force and “solid representation of the broader market”. It helps in monitoring and tracking the Wilshire 5000 index, which is way more inclusive.
It is basically a “stock market and economic indicator”. Dow now today is still maintaining 30 companies and monitors their performance. It “expanded” to 30 companies in 1929.
How is the stock market right now?
With elections having ended and the result announced, it is best to wait and watch how the stock markets perform in the forthcoming days. You can keep track of the Dow news and find out whether the markets are up or down. Accordingly, you can invest your hard-earned dollars and assess the returns.
Further Reading
