What is the Dow Jones?

Chances are you’ve heard financial news reports talk about the Dow Jones, or simply “the Dow.” They’re referring to the Dow Jones Industrial Average (DJIA),¹ one of the oldest and most closely watched stock market indexes. The good news is you don’t need to be a financial pro to understand how it works. So what is the Dow? Here’s more on this benchmark stock market index.

What is the Dow?

The Dow is a stock market index that includes 30 large publicly traded US companies that represent many industries, including finance, technology, and pharmaceuticals. Instead of looking up each company’s stock performance individually, many investors use the Dow Jones Industrial Average as a measure of how the US stock market is performing. It’s one of 3 major US stock market indexes, the others being the S&P 500^®2 and the Nasdaq Composite.³

How does the Dow Jones Industrial Average work?

The Dow Jones Industrial Average is a price-weighted average, meaning that higher-priced stocks have a greater effect on the DJIA number. So arriving at the average is not as simple as adding up each company’s share price and dividing by 30 (the number of companies in the index).

Instead, the DJIA number comes from the combined value of all the share prices in the index divided by a divisor that’s periodically adjusted to account for events such as stock splits and changes to index components. Whatever the divisor is at the time, the Dow's value reflects the combined price movements of its 30 component stocks. Because the Dow is price-weighted, changes in higher-priced stocks generally have a greater effect on the index than changes in lower-priced stocks.

DJIA vs. other major indexes

Now that you read how the Dow works, here’s how it compares to other major stock market indexes.

DJIA vs. S&P 500

The S&P 500^® also tracks the performance of large US companies, but it includes roughly 500 stocks, some of which overlap with Dow stocks. Since the S&P 500 has more stocks, it provides a broader view of the entire market.

While the Dow is most affected by stock prices, the S&P 500 is weighted by market capitalization, or the total market value of a company's outstanding shares. Companies with larger market capitalizations have a greater influence on the S&P 500, whereas companies with higher stock prices drive the Dow.

DJIA vs. Nasdaq

The Nasdaq Composite is an index that represents the performance of stocks listed on the Nasdaq stock market exchange. Like the S&P 500, the Nasdaq Composite uses a market capitalization-weighted average instead of the price-weighted average the DJIA uses. More differences: The Nasdaq Composite currently tracks more than 3,500 stocks of various sizes, and there’s a strong focus on technology companies. The DJIA, on the other hand, tracks only 30 large companies from a variety of industries.

DJIA vs. Russell 2000

The Russell 2000⁴ tracks the performance of small-capitalization stocks. These are companies with total outstanding share values on the lower side. This index starts by looking at the Russell 3000, which lists 3,000 US companies that represent almost all of the investable equity market. The Russell 2000 summarizes the performance of the 2,000 smallest companies on that index and is market capitalization-weighted. Conversely, the DJIA tracks just 30 large-capitalization stocks and is price weighted.

DJIA vs. Global Dow

There’s also an index that focuses on companies around the world. It’s called the Global Dow, and it tracks the performance of 150 companies from international markets. Although it was also created by the Dow Jones company, the Dow, their flagship US index, only includes 30 domestic stocks.

What companies are in the Dow?

The Dow focuses on well-known blue-chip companies that are industry leaders and have sustained growth and wide investor interest. As of August 2026, the following companies are included in the Dow:

1. 3M
2. Alphabet
3. Amazon
4. American Express
5. Amgen
6. Apple
7. Boeing
8. Caterpillar
9. Chevron
10. Cisco Systems
11. Coca-Cola
12. Goldman Sachs Group
13. Home Depot
14. Honeywell International
15. IBM
16. Johnson & Johnson
17. JPMorgan Chase
18. McDonald’s
19. Merck
20. Microsoft
21. Nike
22. NVIDIA
23. Procter & Gamble
24. Salesforce
25. Sherwin-Williams
26. Travelers Companies
27. UnitedHealth Group
28. Visa
29. Walmart
30. Walt Disney

Why is the Dow Jones Industrial Average important?

Because the Dow Jones Industrial Average condenses top companies’ performance into one number, investors get a quick and easy-to-understand view of what’s happening in the US stock market. For this reason, it’s one of the most looked-at stock benchmarks.

Some might question whether an index with only 30 companies can give enough insight into the stock market as a whole. For some context, in March 2020—as the COVID-19 pandemic took hold—the Dow fell nearly 3,000 points in a single day.⁵ But the market later rebounded, and the Dow went on to reach record-breaking heights. This was similar to how the entire stock market performed on average.

Historical performance of the Dow Jones

In the 10 years ending December 31, 2025, the DJIA posted an annualized return of 11.2%.⁶ During this same period, the S&P 500 came in at 13.9%.⁷ The Nasdaq Composite outperformed both, returning 19.1% each year on average.⁸ These numbers account for tough market years that happened during this period, like in 2022, when many stocks lost value. Still, during this time frame, the companies on the Dow Jones index experienced smaller losses than other indexes—underscoring that while the Dow is often viewed as an overall market benchmark, performance can diverge. The Dow fell by 8.8% in 2022—versus a loss of 19.4% for the S&P 500 and 33.1% for the Nasdaq.⁹

The main takeaway is that the stock market can be volatile. Investors can expect ups and downs along the way, but the Dow has a track record of steady long-term gains. Of course, past performance is no guarantee of future results.

How to invest in the DJIA companies

While you can’t invest in the Dow index directly, you could invest in funds that seek to replicate the index’s performance. Here are the steps to take:

1. Open an investment account

   To invest in stocks, you’ll need either a taxable brokerage account or a tax-advantaged account, like a retirement account. If you don’t already work with a broker, here’s what to look for in a brokerage as you compare your options.

2. Fund your account

   Move money from a bank account into your investment account, so you have dollars to invest.

3. Choose how you want to invest

   You could buy shares of all 30 companies on the DJIA, though this would be time consuming. Another option if you want to invest in DJIA companies is to buy shares of a fund, like an exchange-traded fund (ETF), that tracks the Dow. This could offer exposure to a diverse range of companies with a single investment. Just be aware of any fees the fund charges.

4. Place your trade

Once you decide what to invest in, decide how much money you’d like to invest and buy the investment.