Dow Jones (DJIA).

In plain English

The Dow Jones Industrial Average (DJIA) tracks 30 large, established U.S. companies chosen by an editorial committee. It dates back to 1896. Unlike the S&P 500, which is weighted by company size, the Dow is price-weighted: a $400 stock moves the index more than a $50 stock regardless of which company is bigger. That makes the Dow a quirky benchmark, but its long history and headline status keep it relevant.

01Why it matters

When the news says 'the Dow is up 200 points,' that is a price-weighted move across 30 stocks. The S&P 500 is the better measure of the broad U.S. market, but the Dow is what most people quote because it has been around longer and has a memorable name.

02The math, step by step

On October 19, 1987 (Black Monday), the Dow fell 22.6% in one day, the largest single-day percentage drop in its history. The index recovered the lost ground in less than two years.

03What this is NOT