When Can You Trade the Dow Jones Industrial Average?
The Dow Jones Industrial Average (DJIA) is an index that shows the average price of 30 large, publicly traded U.S. companies across many sectors. The index represents the performance of its constituents and is often used by investors as an overall summary of the entire U.S. stock market.
Although the Dow Jones index can't be traded in-of-itself, the stocks within the index can be traded individually or within other investments.
- The Dow Jones Industrial Average (DJIA) is an index that shows the average stock price of 30 large, publicly traded U.S. companies.
- Although the Dow Jones index can't be traded in-of-itself, the stocks within the index can be traded individually or within other investments.
- The Dow Jones components are either listed on the New York Stock Exchange (NYSE) or Nasdaq.
- Trading hours for the two exchanges are from 9:30 a.m. to 4 p.m. EST, Monday through Friday.
How Trading the Dow Jones Industrial Average Works
Since the DJIA is a statistic and not an exchange or marketplace, there is no one time the Dow Jones is open. However, the value of the Dow Jones fluctuates during each trading session as the prices of the underlying stocks in it fluctuate. Therefore, you could relate the trading hours of the index to that of the Dow Jones component stocks.
The Dow Jones components are all listed on the New York Stock Exchange (NYSE) or Nasdaq. As a result, the index follows the trading hours for the two exchanges, which both adhere to the same schedule of hours from 9:30 a.m. to 4 p.m. EST, Monday through Friday. The two exchanges also observe the same holidays.
Individual Stocks of the DJIA
The Dow Jones Industrial Average is comprised of 30 stocks, which represents the most well-established companies in the United States. Although most of the companies have remained in the index for many years, there have been instances when stocks have been removed and replaced. For example, in June of 2018, General Electric Company (GE) was replaced by Walgreens Boots Alliance Incorporated (WBA).
Below is a listing of the components of the Dow Jones Industrial Average. Investors can trade each of these stocks through a brokerage company.
Funds that Track the DJIA
The exchange-traded fund (ETF) that tracks the Dow Jones Industrial Average (DJIA) is one of the most widely-traded ETFs today. An exchange-traded fund is a collection of securities that tracks an index. Investors can buy an ETF to mirror the stock price movements of its underlying index.
The SPDR Dow Jones Industrial Average ETF Trust (DIA) tracks the Dow Jones to provide investors with exposure to its components. The DIA has over $21 billion in assets under management (AUM).
Below is a breakdown of the fund–as of July 2020–showing the percentage of the fund's allocation or weighting by industry.
- Information Technology: 26.95%
- Healthcare: 14.51%
- Consumer Discretionary: 14.12%
- Industrials: 13.57%
- Financials: 13.04%
- Consumer Staples: 8.89%
- Communication Services: 4.56%
- Energy: 4.5%
- Materials: 1.05%
We can see that technology and industrial companies comprise of roughly 40% of the DIA, meaning their stock prices can have a larger impact on the value of the fund.
In other words, you can trade the DIA during market hours just as if you owned shares of all the stocks within the index. The value of the ETF fluctuates throughout the trading session as the value of the Dow Jones changes.
You can also find mutual funds that contain companies that are listed in the DJIA. However, please research thoroughly before investing, because each fund has its own fee structure.