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What does the Dow Jones stock charts show?

A:

Quick Answer

Charts of the Dow Jones Industrial Average show the value of this stock index over a period of time ranging anywhere from a day to a year. The Dow Jones Industrial Average itself is a score of the stock prices of 30 companies thought to reflect overall economic trends.

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Full Answer

The Dow Jones Industrial Average is an index score, not the simple average of the stock prices of the 30 companies that comprise the index. While this stock index did initially begin as an average of 11 stock prices in 1884, it has been superseded by a method that uses a divisor to adjust the index to reflect changes in stock price without being affected by the number of shares available on the market. This divisor is itself adjusted periodically to maintain as much parity between historical and modern values of the Dow Jones Industrial Index as possible.

The composition of the 30 companies in the Dow Jones Industrial Average has changed considerably over time. The original version of the index created by Charles Dow focused primarily on railroad companies, as they were the largest corporations at the time. As of 2015, the index is still weighted towards large industrial companies but includes several large energy, entertainment and high-tech companies to help it reflect the overall health of the economy more accurately.

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