The Dow Jones Industrial Average is a widely followed measure used by investors and analysts to gauge the performance of the U.S. stock market. For more than a century, it’s been synonymous with the American stock market and economy at large.

Originally featuring 12 stocks, the DJIA now includes 30. Its short list makes it unique among other bellwether indexes like the S&P 500, with 500 stocks, and the Nasdaq Composite, with over 3,000. 

The Dow is meant to represent the strength of U.S. businesses, but its narrow focus on 30 stocks has its downsides. Here’s a case for (and against) monitoring the Dow as your preferred market index. 

A brief history of the Dow

The Dow Jones Industrial Average was launched by Charles Dow, publisher and founder of The Wall Street Journal, in 1896. 

The index originally consisted of 12 stocks in the industrial sector. In 1916, the index expanded to cover 20 stocks, and then it grew again in 1928 to its present 30-stock format. The measure now aims to cover sectors that represent the whole of the U.S. economy, not including transportation or utilities.

Today, these sectors include information technology, financials, healthcare, consumer discretionary, consumer staples, communication services, energy, and materials.

Below is a table of the stocks that make up the Dow, sorted by their sector.

The DJIA’s 30 stocks by market sector

Related: From cotton oil to steel: The 12 original companies in the Dow Jones Industrial Average

What are the advantages and disadvantages of the Dow’s small size?

Some investors pay close attention to the moves of the Dow, while others devote their attention to larger indexes. Below are some of the advantages and disadvantages of monitoring the 30-stock index.

Pros

Because the Dow contains only 30 stocks, it’s a very easy index to track. For an investor who wants to match the performance of the Dow, an index fund that holds 30 stocks is easier to manage than one with 500 or 2,000 stocks, as is the case with the broader S&P 500 Index or the small-cap Russell 2000 Index.

A spreadsheet that tracks each stock in the Dow live by price/weighting, sector, and market cap can be found here.

Focusing on the Dow is also one way to help concentrate investment resources — as well as the time to conduct research and analysis — into the 30 companies that make up the index. 

Cons

The Dow tracks some of the largest publicly traded companies by market capitalization, but due to its narrow size, it lacks the diversification of a broader index. 

Because the Dow is concentrated on just 30 stocks and is a price-weighted index, the price movements of more expensive stocks have a bigger influence on the Dow’s performance than cheaper stocks, even if the companies behind the cheaper stocks are worth more.

For example, Goldman Sachs Group has the largest weighting in the Dow because it trades at over $900 per share. But its market capitalization, at about $275 billion, is dwarfed by Nvidia, which is valued at almost $5 trillion but trades at a lower per-share price.

Because the 30 companies in the Dow are hand-picked by an experienced committee to represent the best of the American economy, expectations of outperformance are common, but that isn’t always the case.

When comparing the performance of the Dow to the S&P 500, the broader stock measure outperformed the Dow over the long term. That’s partly due to the success of the technology sector. While the Dow includes six tech stocks, the S&P 500 has many more. For instance, the Dow is missing key stocks such as Alphabet and Meta that have contributed to the S&P 500’s strong long-term performance. 

More on the Dow:

• DJIA Master List: What companies make up the Dow Jones Industrial Index in 2026?
• What is the Dow divisor & how does it work?
• What happens when a stock splits in the Dow Jones Industrial Average?

How correlated are the Dow and the S&P 500? The indexes’ performances compared

One way to gauge how the Dow’s performance stacks up in the stock market is to measure it against another bellwether index like the S&P 500. Interestingly, analysis shows that the Dow and the S&P 500 have moved in lockstep with one another for a long time. In other words, when the Dow rises, so does the S&P 500, and likewise when they decline.

A spreadsheet tracking the correlation between the Dow Jones Industrial Average and the S&P 500 Index can be found here. This spreadsheet pulls live data on each index from Google Finance. To make a copy for yourself, select “File” then “Make a copy.”

Using correlation analysis (where 1 is perfectly correlated and -1 represents a perfectly inverse relationship), over a 15-year period through mid-February 2026, the Dow and the S&P 500 had a correlation of 0.992. Over a 10-year period, that number is 0.990, and over the last 5 years, it was 0.991. The data suggest that the two indexes rose and fell together almost every day over the 15-year period. 

Still, even though both indexes’ moves were in the same direction, their performances weren’t always the same. In that same 5-year period, the Dow rose 57%, while the S&P 500 advanced 76%. Over 15 years, gains were greater: 300% for the Dow, and 414% for the S&P 500.