# Dow Jones Industrial Average

The Dow Jones Industrial Average (DJIA), or simply the Dow (/ˈd/), is a stock market index that indicates the value of 30 large, publicly owned companies based in the United States, and how they have traded in the stock market during various periods of time.[4] These 30 companies are also included in the S&P 500 Index. The value of the Dow is not a weighted arithmetic mean[5] and does not represent its component companies' market capitalization, but rather the sum of the price of one share of stock for each component company. The sum is corrected by a factor which changes whenever one of the component stocks has a stock split or stock dividend, so as to generate a consistent value for the index.[6]. It is not an accurate representation of the US market or total market.[7][8][9]

### Bull market of 2009–present

Towards the latter half of 2009, the average rallied towards the 10,000 level amid optimism that the Late-2000s (decade) Recession, the United States Housing Bubble and the Global Financial Crisis of 2008–2009, were easing and possibly coming to an end. For the decade, the Dow saw a rather substantial pullback for a negative return from the 11,497 level to 10,428, a loss of a little over 9%.

The DJIA from January 2000 through February 2015.

During the early part of the 2010s, aided somewhat by the loose monetary policy practiced by the Federal Reserve, the Dow made a notable rally attempt, though with significant volatility due to growing global concerns such as the 2010 European sovereign debt crisis, the Dubai debt crisis, and the United States debt ceiling crisis. On May 6, 2010, the index lost around 400 points over the day, then just after 2:30 pm EDT, it lost about 600 points in just a few minutes, and gained the last amount back about as quickly. The intra-day change at the lowest point was 998.50 points, representing an intra-day loss of 9.2%. The event, during which the Dow bottomed out at 9,869 before recovering to end with a 3.2% daily loss at 10,520.32, became known as the 2010 Flash Crash.[36] The index closed the half-year at 9,774.02 for a loss of 7.7%.[37]

Recovering its Great Recession losses, the Dow closed at a new record high on March 5, 2013,[38] and on May 3 surpassed the 15,000 mark for the first time before towering above the next few millenary milestones thanks to commendable economic reports.[39][40][41] The index closed 2014 at 17,823.07 for a gain of 71% for the five years before progress became minimal the next year.[42] However, the overwhelming economic factors exhibited in 2015 precipitated the Dow's major pullback, which questioned some as to whether this was just a correction for the first time since 2011 or a fresh, new bear market.[43][44] This led to the Dow closing at 17,425.03 for 2015, the first annual loss since 2008.[45] After nearly 14 months since the last record close, the Dow finally achieved a fresh new, central-bank debt fueled record close on July 20, 2016 at 18,595.03 along with an intraday high of 18,622.01.[46]

During the late part of the 2010s, despite anticipations of post-election selloffs, the Dow rallied significantly after Donald Trump was elected President. On January 25, 2017, the Dow hit a record high of 20,000, an increase of 1,667 points since his election in November 2016.[47] Throughout the course of the rest of 2017 and January 2018, the Dow skyrocketed past a few millenary milestones, including the symbolic 25,000 on January 4, 2018.[48] However, on February 2, 2018, the Dow suffered its biggest loss since Brexit on June 24, 2016.[49] As volatility made its return for next week, the largest intraday point drop of 1,597.08 points and largest closing point drop of 1,175.21 points were both set on February 5, 2018 although percentage changes were not as extreme as some past stock market crashes.[50] Spring and summer brought much-needed relief for the Dow as the index eventually soared to new highs. By "fall", the Dow began falling tremendously again for two major reasons: fear of sudden spikes in interest rates by the Federal Reserve[51] and woes in technology stocks.[52] While the Dow plunged more than 10%, but less than 20%, on a closing-basis in late 2018 to confirm correction status, but not bear market status, the index rallied more than 10% from its Christmas Eve low, leading some to argue whether that correction has ended or needs to close at a new high.[53]

On August 2, 2019, the Dow Jones registered its worst week of the year due to ongoing trade war fears. [54]

## Investing

Investing in the DJIA is made widely accessible in equities through exchange-traded funds (ETFs) as well as in derivatives through option contracts and futures contracts.

Several ETFs follow the Dow Jones Industrial Average, including with short or leverage strategies.[55] The biggest has assets under management in the tens of billions dollars as of 2017.[56]

### Options contracts

The Chicago Board Options Exchange (CBOE) issues Options Contracts on the Dow through the root symbol DJX. There are also options on the various ETFs; Performance ETFs, Inverse Performance ETFs, 2x Performance ETFs, Inverse 2x Performance ETFs, 3x Performance ETFs, and Inverse 3x Performance ETFs.

## Calculation

To calculate the DJIA, the sum of the prices of all 30 stocks is divided by a divisor, the Dow Divisor. The divisor is adjusted in case of stock splits, spinoffs or similar structural changes, to ensure that such events do not in themselves alter the numerical value of the DJIA. Early on, the initial divisor was composed of the original number of component companies; this initially made the DJIA a simple arithmetic average. The present divisor, after many adjustments, is less than one (meaning the index is larger than the sum of the prices of the components). That is:

${\displaystyle {\text{DJIA}}={\sum p \over d}}$

where p are the prices of the component stocks and d is the Dow Divisor.

Events such as stock splits or changes in the list of the companies composing the index alter the sum of the component prices. In these cases, in order to avoid discontinuity in the index, the Dow Divisor is updated so that the quotations right before and after the event coincide:

${\displaystyle {\text{DJIA}}={\sum p_{\text{old}} \over d_{\text{old}}}={\sum p_{\text{new}} \over d_{\text{new}}}.}$