Dow Jones[1]: A True Cross Section of American Industry?
If you ask a financial analyst or expert trader how to get a picture of where the global economy is currently headed, they will likely tell you to consult the Dow Jones Industrial Average[2]. The second-oldest market index in the US, the Dow Jones today is a vital indicator of the health and direction of travel of the world’s largest and most globalized economy. But delving a little deeper, is it still an accurate cross section of the American industry of today?
- The History of the Dow Jones Industrial Average: 1884-2020
- Is the Dow Jones Still Purely Industrial?
- Dow Jones and the White House
- Does the Dow Jones Represent the US Economy?
- Dow Jones vs The World
- Conclusion
Put simply, the Dow Jones Industrial Average is a collection of the 30 largest American companies, representing $8.33 trillion in total market capitalization today, with Dow Jones stock generally among the most sought-after and heavily traded in the world.
However, the Dow Jones is more than just a ranking of the top performers in the US economy. Its performance largely (although not always) mirrors that of the American economy, and a bad day for the Dow Jones is almost invariably a bad day for the world. Understanding the Dow Jones and what makes it tick is imperative for any budding economist, analyst, trader, or investor. The myriad factors that cause the Dow Jones ticker to move up or down reflect the social, political, cultural, and technological developments that continue to shape the global economy today.
The 30 companies that make up the Dow Jones right now are all household names that are known the world over, even by those with only a passing interest in business and finance.
