DJIA - American Stock Exchange Dow Jones Industrial Average index is the oldest market index created to track the development of the American industry. Initially, the index was calculated from the formula of arithmetic average value of the shares of industrial companies in the DJIA. However, the term "industrial" is now a tribute to history. Today, the index includes 30 of the strongest US companies, of which only a few are industrial conglomerates. The rest of the enterprises belong to such economy sectors as engineering, oil and gas, healthcare, pharmaceuticals, software development and computer technology, as well as telecommunications and electronics. In the calculation of DJIA the value of shares of the included companies is added up and then divided by the correction factor. This calculation method is a significant drawback, as if one of the companies included in the DJIA list has a smaller capitalization in comparison with others, but its share price is higher, it gets greater weight in the calculation of the index. Therefore, this trading tool does not reflect the overall activity of the US stock market and to assess its objectivity is often used in conjunction with the S&P500 index.
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