What is the Dow Jones?

The Dow Jones Industrial Average is a stock index that tracks 30 of the largest U.S. companies. Created in 1896, it is one of the oldest stock indexes, and its performance is widely considered a useful indicator of the health of the entire U.S. stock market.

What are stock market indexes?

A stock market index shows how investors feel an economy is faring. An index collects data from a variety of companies across industries. Together, that data forms a picture that helps investors compare current price levels with past prices to calculate market performance.

The S&P 500 (also known as the Standard & Poor's 500), a registered trademark of the joint venture S&P Dow Jones Indices, is a stock index that consists of 500 of the largest companies in the U.S. It is generally considered the best indicator of how U.S. stocks are performing overall.

Dow Jones Industrial Average

By Jeremy Bowman – Updated Mar 4, 2026 at 5:05 PM EST | Fact-checked by Margo Winton Parodi

Key Points

The Dow Jones index tracks 30 large U.S. companies, giving a picture of the overall market.
Investors can invest in the Dow by buying shares of ETFs that track the index or of companies listed in the index.
A particular denominator, known as the Dow Divisor, is used to calculate the value of the Dow Jones Industrial Average.

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The Dow Jones Industrial Average includes not just industrial stocks but also stocks from most sectors and industries, except for utilities and transportation, which are measured by other indexes specific to those fields.

According to S&P Global, the Dow Jones Industrial Average is a "world-renowned gauge of the U.S. equity market." Most Dow Jones Industrial Average–listed companies trade on the New York Stock Exchange.

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An infographic comparing the origins of and types of stocks in the Dow Jones Industrial Average, the S&P 500 and the Nasdaq. — Image source: The Motley Fool.

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Unlike the Dow, the S&P 500 and the Nasdaq are market capitalization–weighted, meaning that the most valuable companies influence index values the most. Both the S&P 500 and the Nasdaq are more heavily weighted toward technology stocks than the Dow, and the Nasdaq has the most tech exposure of all three indexes.

The stocks of tech giants such as Alphabet (GOOG -0.79%)(GOOGL -0.73%), Meta (META -1.06%), and Tesla (TSLA -0.10%) aren't included in the Dow, but they are major components of the S&P 500 and the Nasdaq.

The Dow underweights the tech sector and is more weighted than its peers toward cyclical sectors such as financial services and heavy industry. Despite the differences, the Dow and the S&P 500 tend to perform similarly.

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Other major market indexes

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S&P 500 Explained: How the Index Works and How to Invest in It

The 500 largest companies make up this bellwether index.

Your Complete Guide to the Nasdaq Composite Index

Once you understand how the Nasdaq Composite Index works, you can learn to use this index to help guide you in creating wealth.

Your Complete Guide to the Russell 2000 Stock Market Index

The Russell 2000 index is considered a benchmark for smaller U.S. stocks.

Stock Market Indexes Explained: What They Are and Why They Matter

What are the major stock market indexes, and what stocks do they contain?

Most professional investors focus on the performance of the S&P 500 because it includes a broad range of stocks and is weighted by market cap. That is a more accurate way to measure the overall health of the stock market.

The Dow Jones Industrial Average may not be as comprehensive or precise as the S&P 500 or a total market index such as the Wilshire 5000 Total Market Index (WFIV.X -1.05%), but this long-standing index still serves as a good indicator of the stock market's overall direction and functions as a convenient short list of some of the most powerful companies in the U.S.

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Dow Jones FAQs

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About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

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JPMorgan Chase is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Jeremy Bowman has positions in Amazon, Home Depot, Meta Platforms, Nike, Nvidia, Visa, and Walt Disney. The Motley Fool has positions in and recommends 3M, Alphabet, Amazon, Amgen, Apple, Boeing, Caterpillar, Chevron, Cisco Systems, GE Aerospace, Goldman Sachs Group, Home Depot, Honeywell International, Intel, International Business Machines, JPMorgan Chase, Merck, Meta Platforms, Microsoft, Nike, Nvidia, S&P Global, Salesforce, Tesla, Visa, and Walt Disney. The Motley Fool recommends CME Group, Johnson & Johnson, Sherwin-Williams, UnitedHealth Group, and Verizon Communications. The Motley Fool has a disclosure policy.