DEFINITION of 'Blue Chip Indicator'

A formal gauge or measure of the performance of a selected group of blue chip securities. Blue chip indicators act much the same way as other indicators or indices, in that they display the performance of a selected group, in this case blue chip securities, over a given period of time, or even in real time. Market observers would most likely use such blue chip indicators to gauge the performance of the most widely-owned companies in an economy.

BREAKING DOWN 'Blue Chip Indicator'

The most popular blue chip indicator would arguably be the Dow Jones Industrial Average, which tracks the performance of the 30 most widely-owned, large public companies. The index average is calculated using the price weighted method, and is scaled to compensate for stock adjustments, such as splits and buybacks. The performance of the Dow is a key economic indicator in that it illustrates the performance of 30 of the largest and most influential companies in the country.

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