How is the Dow Calculated?
The Dow closed on September 29th at 16,049. Where did that number come from? How do you go from the closing quotes for each of the 30 stocks that make up the Dow Jones Industrial Average to the number you see on the web or hear on the news? The answer is pretty easy. You add up the closing quotes of the individual stocks and divide by a constant (0.14967727343149). The Marimekko chart below shows the Dow deconstructed. Each stock is grouped by industry and its closing price and percentage contribution to the index are included.
The Marimekko chart allows us to group each Dow stock by industry, to show the contribution of each stock to the Dow and the overall industry contribution. The data is sorted so that the biggest bars are on the left and the biggest segments on the bottom. I added a data row to quantify each industry's percentage contribution to the industry. I also edited the grand total label to include the information on the divisor and the actual DJIA. Here is the chart in SlideShare to download and edit with Mekko Graphics:
