Trading the Dow Jones
The Dow Jones Industrial Average, commonly just called the ‘Dow’, was historically the benchmark for US stock performance, although it has been replaced in the eyes of many investors by the S&P 500.
The Dow Jones Industrial Average is composed of only 30 stocks, and its constituents are determined by price rather than market capitalization. Find a list of constituents here.
As with any share index, it is the price of the underlying shares that moves the price of the index. In this case, it is the 30 biggest listed companies in America.
Although traditionally, these would have been listed on the New York Stock Exchange, today they only need to be listed on one of the big US exchanges.
At the time of writing, some of the most expensive companies in the index were 3M, Goldman Sachs Group, IBM and United Health.
The performance of the Dow is driven by a smaller series of shares, even if these are some of the more expensive companies in the US.
Because the Dow has been measuring US stock prices since the 1890s, it has been through some of the worst crashes in US history, in particular the Wall Street Crash of 1929, but also the Black Wednesday crash of 1987.
However, the changing structure of the US share markets, e.g. across more than a dozen different exchanges, and the lack of liquidity in the share markets as buyers and sellers become more selective, means that volatility in the Dow and its underlying shares has increased in recent years.
The choice of whether to trade the Dow Jones or the S&P 500 largely boils down to individual preference, but some factors include the larger average market cap of Dow Jones constituent companies and the different price calculation methodologies.
You can trade the Dow Jones in a number of different ways, the most popular of which are as a futures or options contract, an Exchange Traded Fund, or as a Contract for Difference.
CME Group has an extensive list of futures products based on the price of the Dow Jones Industrial Average, and it is easier than ever for an individual to open an account with an approved broker to trade CME Group futures – simply ensure you have a futures-enabled trading account. You can find a list of futures brokers here or find more educational resources on The Armchair Trader on how to trade futures on the Dow Jones Industrial Average.
Or, explore any number of index-linked investment products that will track the Dow Jones. If you’re a UK resident, you’re also able to trade the index through a tax-free spread betting broker.
Latest Dow Jones Industrial Average News
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US and European politics dominate this morning despite North Korea's best efforts to spoil the party with their latest missile test
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Yesterday's ADP employment data-inspired gains were reversed following some surprises from the Fed meeting minutes which will weigh on the markets today
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Things were quiet this morning, the start of the week largely lurking in the shadow of Wednesday’s Fed meeting.
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The week’s scattershot trading continued this Friday afternoon, with the Dow Jones hitting a fresh high amidst all the uncertainty
FTSE drops following better than expected manufacturing data
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FTSE struggles with 7200, pound eyes $1.26
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Euro still struggling thanks to Le Pen fears/Greek debt crisis
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Pound and euro continue to suffer, Dow Jones at new highs
Tuesday continued to be defined by movements from the pound and euro as they deal with the shifting political landscape in Europe
Pound and euro suffer on Brexit and Draghi/Le Pen respectively
The forex markets dominated things this morning, with both the pound and euro having a rough time of it
FTSE creeps above 7200 on lifeless Monday morning
It’s hard to know what to say about the markets this morning, with Monday so far devoid of anything noteworthy
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Sterling suffered through the Bank of England’s ‘Super Thursday’ this afternoon, the currency displeased with what Carney and co. dished up
Pound nervy ahead of Bank of England forecasts
The pound became far more jittery as the morning progressed, much to the benefit of the FTSE
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A sharply negative open in the US caused some of the morning’s Eurozone goodwill to dissipate as the day went on
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In what is a fairly significant development the Dow Jones opened under 20000 this Monday, causing the Trump travel ban losses to increase across the board
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Despite a weaker pound AND a huge increase from Tesco the FTSE barely budged this Friday morning
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A stronger than forecast fourth quarter GDP figure failed to have much of an impact on the UK markets this Thursday morning
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After flirting and demurring for the past month or so the Dow Jones finally sealed the deal this Wednesday, surging past the 20000 mark for the first time in its history
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Dollar and Dow Jones both fall as Trump meets with manufacturers
The tone of trading didn’t waver this Monday, the markets awash with some low-level Trump jitters
Dow Jones rises ahead of Trump inauguration
With all the attention on Trump’s inauguration the market had to make do with a few scraps this Friday afternoon
Weak UK retail sales reading weighs on pound
Not a lot happened this morning beyond the pound gradually chipping away at the gains it has made since the start of the week
Solid jobs data fails to spark change from FTSE or pound
Despite a couple of positive surprises the UK jobs report failed to change much this morning, the market’s continuing to trade in the shadow of yesterday’s Brexit speech from Theresa May
Pound storms ahead as May promises parliamentary vote on Brexit deal
As some expected the pound had worked out most of its negative feelings about Theresa May’s Brexit-intensions already
UK inflation surge bolsters sterling ahead of May’s Brexit speech
Despite Theresa May’s looming Brexit speech the pound has continued to perform fairly well this Tuesday, bolstered by a greater than forecast inflation increase
Markets await comments from Carney and Trump
Once again the FTSE managed to hit a fresh high in the least interesting way possible this Wednesday, creeping near 7300 off the back of a fresh bout of sterling-weakness
Weak pound and buoyant supermarkets fuel latest FTSE rise
Given the lack of economic news it is no surprise that Monday’s Brexity trading has leaked into Tuesday, with a weak pound continuing to fuel a high-hitting FTSE
Non-farm Friday flop for the Dow Jones
The final non-farm Friday of Obama’s Presidency failed to dismiss the market’s New Year reticence this afternoon
Services PMI surprise lifts pound from its lows
Like the big old flirt it is the FTSE briefly hit a new, post-7200 intraday peak this Thursday, only to retreat from that level following a stronger than forecast services PMI
FTSE 100 continues to be hampered by Retail Sector
The FTSE failed to find any momentum this morning, hampered by a bloody retail sector and an increasingly sour set of commodity stocks
FTSE continues to flirt with 7200 after strong open from Dow Jones
The FTSE tickled 7200 this afternoon, while the Dow Jones built back towards its own landmark level
Pound boosted by UK Manufacturing PMI
In the aftermath of the PMI release sterling jumped 0.6% against the euro, taking it back above 1.18 for the first time in a week and a half
FTSE 100 and DAX remain inert despite Monte dei Paschi swings
Despite some characteristically laughable swings from Monte dei Paschi, Thursday has been the latest pre-Christmas trading session blighted by inertia
Monte dei Paschi in trouble; Dow Jones edges ever closer to 20000
A dearth of positive news has prevented the European indices from posting any growth this Wednesday
Sluggish trading continues for FTSE, while GBP losses widen against USD
The European indices maintained a sluggish pace this Tuesday, with little to disturb the quiet pre-Christmas trading
Monte dei Paschi weighs on European banking sector
Santa remained absent this Monday morning, the European indices lacking the spark that set them soaring last week
USD dominates with Bank of England rate vote on the horizon
There was little change from the tone set at the start of the day, with the post-Fed rate hike reaction still dominating proceedings
Dow Jones and dollar both display slight pre-Fed jitters
The tone of trading was fairly negative this afternoon, the major indices all slipping as investors await the results of the month’s much-anticipated Federal Reserve meeting
FTSE and pound unimpressed by UK employment data
Despite some strong figures there were a few things to fret over in the UK’s latest jobs report this Wednesday
Dow teases 19900 while DAX and FTSE benefit from banking sector lift
There were some distant sleigh bells heard on the markets this Tuesday, the major indices all climbing higher as the day progressed
Sterling rises as inflation increase points to potential BoE rate hike
As expected October’s dip in UK inflation was proven to be an anomaly, with November’s reading coming in at a weak pound-inspired 2 year high of 1.2%
FTSE 100 fails to find Brent Crude boost
After all the Brent Crude excitement of this morning Monday has been a thorough disappointment, with little sign of a Santa rally ahead of a busy week for data
Fresh Monte dei Paschi/ECB drama weighs on European banking sector
Some more Monte dei Paschi drama brought bit of much-needed excitement to proceedings this afternoon, even if the wider market didn’t pay too much attention to the news
Dull showing from FTSE and DAX, while Dow eyes another peak
Friday was always going to look a bit drab in comparison to Thursday’s ECB fireworks, especially with a relatively empty economic calendar
Draghi’s ECB QE extension boosts DAX but eviscerates Euro
The market was awash with some classic Eurozone volatility this Thursday, proving the region can still keep up with the drama of the Brexited and Trumped UK and US instruments
Eurozone indices jittery as markets await Draghi press conference
Things have become increasingly jittery this Thursday as investors await the result of this month’s ECB meeting
FTSE and DAX rise despite announcement of Euribor scandal fines
The European banking sector continued to dictate trading this Wednesday, with hopes of a bailout for Monte dei Paschi getting investors hot under the collar
Markets calm thanks to suspended Renzi resignation
There hasn’t been much to work with this Tuesday, the markets settling into an uninspired rhythm as the morning went on
FTSE 100 gathers momentum while Dow Jones eyes 19000
The FTSE continued to barrel ahead this Tuesday as the pound began to shed some of the surprise growth it produced before yesterday’s close
Dollar-harmed commodity stocks drag FTSE lower
On a rather quiet Friday morning the stronger dollar continued to dominate, if at an admittedly reduced pace
Unexpected rise in UK claimant count spooks FTSE and pound
While the headline figures suggested strength, the FTSE and pound weren’t too happy with parts of what this morning’s UK jobs report implied
Hedge Funds Risk-On Despite Danger of Trump Presidency
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FTSE 100 sees early gains disappear, while Eurozone barrels ahead
A positive swell of data has continued to boost the Eurozone this Monday morning; the FTSE’s gains, on the other hand, have gradually disappeared
Dow Jones set for Columbus Day gains as Clinton edges further ahead in the polls
A very quiet Monday left investors’ fears of a hard Brexit as the main market driving force, though at far…
[LONDON] Positive Wall Street sets the pace
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