DJIA is a stock market index that measures the stock performance of the 30 largest U.S. companies listed on the U.S. stock exchanges. Unlike S&P 500, DJIA 30 index is price-weighted, which means a stock trading at $100 will make up 10 times more than a stock trading at $10 in the index.
DJIA is considered less representative of the economy or the market itself as it only containts the top 30 largest US companies (which is a substantially smaller set of companies compared to S&P 500 or Russell 3000). Secondly, price-weighting approach tends to give higher priced stocks more weightage compared to lower priced stocks and it does not give any consideration to the relative industry size or market capitalisation of the stocks. This approach means $1 move in a lower priced stock is the equivalent to a $1 move in a higher priced stock, although the $1 move in a lower priced stock represents a much larger swing for that stock.
Investing in DJIA is possible via Index Funds (Mutual and Exchange Traded Funds) as well as via derivatives such as option contracs and futures contracts.
The word "Industrial" in DJIA does not mean a lot. It's a historical relic, as most of the stocks in the index these days are not from industrial or manufacturing sectos. DJIA 30 has stocks from all sectors except utilities and transportation. The criteria for picking a company into the index is not clearly defined like it is for S&P 500. The 30 companies in the index are all leaders in their respective industries and are large cap stocks.
The following are in DJIA 30:
3M
American Express
Apple
Boeing
Caterpillar
Chevron
Cisco
Coca-Cola
Dow Inc
Exxon Mobil
Goldman Sachs
Home Depot
Interl
IBM
Johnson & Johnson
JP Morgan & Chase
McDonald's
Merck & Co
Microsoft Corporation
Nike
Pfizer
Procter & Gamble
Raytheon
Travelers
UnitedHealth Group
Verizon
Visa
Walgreens Boots
Walmart
Walt Disney Company
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