In 1896, Charles Dow, Wall Street Journal Editor and founder of Dow Jones & Company, compiled and published an index based on the average of 12 US companies, as an indicator of the US stock market performance.

Today the Dow Jones Industrial Average consists of an average of 30 U.S. companies that are thought to mirror the U.S. economy.

'The Dow', as it often called, is normally quoted as an index. This means the stock price of each company is multiplied by a weighting factor to derive the composite index number.

A Stock Market Correction
A 'correction' is a 10% decline in stocks from a recent high.

In recent weeks, the stock market lost 10% from the market high. In one day the Dow dropped 1,175 points – the largest point loss in history.

The volatility of the stock market doesn't necessarily reflect what is happening in the US economy which is still regarded as strong.

A correction is less severe than a 'bear market' when stocks decline 20% from their recent high.

(Note: This information is taken from global economic publications but may not necessarily be the opinion of UBT)