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The Dow Jones often is said to go up or down X amount of points. What does points refer to? A fraction of a US dollar or something? Please advise. Thank you!

2007-03-06 07:22:12 · 3 answers · asked by Silent Kninja 4 in Business & Finance Investing

3 answers

The DJIA is a scaled average of the 30 stocks in the index. The points represent the dollars of that scaled average. So when it goes up 100 points that is the average of what the scaled dollar value of the 30 Dow stocks gained or lost.

2007-03-06 07:32:57 · answer #1 · answered by Michael's M 2 · 1 0

Dow Jones Industrial Average
Definition

DJIA. The most widely used indicator of the overall condition of the stock market, a price-weighted average of 30 actively traded blue chip stocks, primarily industrials. The 30 stocks are chosen by the editors of the Wall Street Journal (which is published by Dow Jones & Company), a practice that dates back to the beginning of the century. The Dow was officially started by Charles Dow in 1896, at which time it consisted of only 11 stocks. The Dow is computed using a price-weighted indexing system, rather than the more common market cap-weighted indexing system. Simply put, the editors at WSJ add up the prices of all the stocks and then divide by the number of stocks in the index. (In actuality, the divisor is much higher today in order to account for stock splits that have occurred in the past.)

Are you just asking because you are curious or is there something else that you are trying to figure out?

2007-03-06 08:08:45 · answer #2 · answered by jimmaharvey 2 · 0 0

A point is, well, a point. If DJIA goes from, say 12,223 to 12,224, it is up by one point. If it goes from, say 12,224 to 12,220, it is down (or off) by four points.

2007-03-06 07:31:18 · answer #3 · answered by NC 7 · 0 1

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