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.
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.
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.