What are the points in Dow Jones exactly?
Dow Jones, often simply known as "The Dow", is a number that represents an average price of 30 of the largest and most widespread shares in the United States. It includes shares from major corporations such as Wal-Mart, American Express, Home Depot, General Motors, IBM, Microsoft and McDonalds, which can be used as a hint of how the stock market behaves as a whole.
The Dow Jones industrial average is one of the several equity market indices created by former Wall Street Journal Editor Charles Dow. The "industrial" part of the name reflects the fact that shares originally selected as part of the index were strongly representative of the production industry.
To calculate the Dow Jones industrial average, the total price of 30 selected shares is divided by a number, which is selected for compensation of distribution, spin-off or similar structural changes within one particular organization. Without this divisor, the number reflects the industry average Dow Jones would be very easily affected by positive or nego events in one society. The distribution of 2: 1 would unfairly reduce the entire index, although there were no major stock changes.
The Dow Jones industrial average is expressed in points. While the industrial average Dow Jones was 40.94 points at the opening of 26 May 1896, it has increased significantly since then. For example, in July 2007 the index passed a 14,000 -point milestone.
The biggest one -day decline in the history of the Dow Jones industrial average happened on the first day of trading after a terrorist attack on the World Trade Center in September 11, 2001, when the index dropped by 684.81 points. Compared to the most important one -day point gain was 499.19 points 16 March 2000.
essentially, the point is equivalent to the US dollar (USD) in stock prices. If you emerge at night when Dow increased by 25 points, it means it would cost approximately $ 25 more to buy the same shares included in the Dow Jones industrial averageToday before it would have the cost of the previous working day.
While the industrial average Dow Jones is a strongly recognized character in the world of business and finance, it is not without its critics. For example, some people feel that the calculation gives shares with a higher price more influence than their lower prices. In addition, because Dow includes only 30 supplies, several people speculated that it is difficult to consider it to be the exact representation of the overall market performance.