# How is the change in the DJIA (Dow Jones Industrial Average) calculated?

For example, today (April 1st, 2020) the DJIA:

Open 21,227.38

Low 20,784.43

High 21,487.24

Close 20,943.51

Change reported as: −973.65 (-4.44%)

## 2 Answers

The "change" is the difference from the close of the previous day to the close of the current day (or the last trade for intra-day change). The "close" is the last trade on one day, and the "open" is the first trade. The open on any given day can be significantly different than the close on the previous day, which is why you can't reconcile your numbers purely from the single day's open.

Note that some providers will include the total day (not just trading hours) in their history, so you may see less of a gap between close and open, but the math is the same.

An index is both a collection of securities and a formula for calculating a score. The Dow Jones industrial average is an index, the S&P 500 is an index. There can be indexes for a stock exchange, there can be one for an industry, there can be ones for an economy, there can even be global indexes. There can be stock indexes, and bond indexes.

The value of the DJIA is calculated by adding all the prices and dividing by a divisor.

To calculate the DJIA, the sum of the prices of all 30 stocks is divided by a divisor, the Dow Divisor. The divisor is adjusted in case of stock splits, spinoffs or similar structural changes, to ensure that such events do not in themselves alter the numerical value of the DJIA. Early on, the initial divisor was composed of the original number of component companies; this initially made the DJIA a simple arithmetic average. The present divisor, after many adjustments, is less than one (meaning the index is larger than the sum of the prices of the components).

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The Dow Divisor was 0.14744568353097 on April 2, 2019 and every \$1 change in price in a particular stock within the average equates to a 6.782 (or 1 ÷ 0.14744568353097) point movement.

The divisor may have changed since April 2019, but the idea is the same. Every time the price of an item in the index changes, the value of the index changes.