Börsenlexikon: Dow Jones

Dow Jones stands for Dow Jones Industrial Average Index (DJIA). This refers to the US stock index for blue chips (corresponding to the Swiss Market Index). This is the world's best-known and most respected US stock market index, which has been calculated since 1897. It refers to only 30 stocks and is calculated permanently during ongoing stock market trading. Charles Dow compiled the index to measure the performance of the US stock market. On the New York Stock Exchange (NYSE), the Dow Jones is the oldest stock index still in existence in the USA after the Dow Jones Transportation Average Index.

The Dow Jones Industrial Average Index is a price index. It is calculated without dividends, subscription rights and special payments, i.e. it is a price-weighted index. The index level is determined exclusively on the basis of share prices and adjusted only for income from subscription rights and special payments. The calculation was originally made by adding up the individual share prices and then dividing them by the number of shares in the index. The number of shares in free float is not taken into account.

The actual informative value of the Dow Jones is often criticised - despite its high profile. The core of the criticism is that the index composition is determined by the publisher of a newspaper. The opening prices of the underlying stocks (constituents) of a day are not all available for the first index value because their trading starts at different times. Therefore, the previous day's closing price must sometimes be used for the index opening value, making meaningful jumps difficult. In addition, the index is price-weighted, which leads to an overemphasis on stocks with a numerically high value.

Lastly, it is a price index, which does not include the dividends paid, which are deducted from the prices (dividend discount), as is the case with performance indices (for example, the SMI). As a result, the Dow Jones is not suitable for a long-term evaluation of performance, but in contrast to the SMI it is suitable for a long-term view of the price development of the stocks included. Despite this criticism, the Dow Jones index is the most important stock index. It influences stock markets worldwide, regardless of how it is calculated.