The aggregate market prices of the 30 stocks that constitute the Dow Jones Industrial Average, or the DJIA, determine the value of the index at any point in time, according to the Graziadio Business Review. Individual prices of the 30 stocks are, in turn, the product of economic and financial factors that include inflation and corporate earnings growth.
Non-economic factors account for about one-third of the value of the DJIA, while economic factors explain the rest, notes the Graziadio Business Review. Management action, a non-economic factor, controls the additional non-economic factors, which include earnings, earnings growth and the level of yield demanded by investors, that make up the financial components of stock value. The economic factors that influence stock value are inflation, gross domestic product and interest rates.
The aforementioned non-economic and economic factors only account for a part of the value of the DJIA, as the Graziadio Business Review details. The unexplained remainder may be the result of measurement errors or additional non-economic factors, such as emotion and consumer sentiment.
Since the DJIA is composed of stocks from a wide range of industries, investors tend to view the index as a proxy for the broader economy, notes The Simple Dollar. However, because the index only tracks 30 blue-chip stocks, some analysts view the DJIA as inadequate fo representing the general market. As of 2015, some of the stocks in the index include Coca-Cola, Cisco Systems, Alcoa, Verizon and Walmart, notes CNN Money.