This can create some unique situations, such as a company with a smaller market cap than other companies in the index having a larger weight because its share price is higher. The Dow is a price-weighted index, which means the stocks are weighted in the index based on their share price. The Dow Jones Industrial Average is a price-weighted index The S&P 500 itself has several requirements around things such as the company’s market capitalization, where the stock trades, profitability and trading volume.įinally, the Dow Jones Industrial Average is maintained by a committee that includes three representatives from S&P Dow Jones Indices and two representatives from The Wall Street Journal.īecause the Dow is limited to 30 companies, when one company enters the index, another must leave. In order to be included in the Dow, a company must be part of the S&P 500 and cannot be part of the transportation or utilities industries (S&P Dow Jones Indices has other indexes that track these areas of the economy). How does a stock get added to the Dow Jones Industrial Average?
