Market Extra: Dow faces an important change to how it’s calculated

The owner of the 121-year-old Dow Jones Industrial Average is set to tweak an important component of the blue-chip gauge on Friday: its divisor.

The so-called divisor, or in this case multiplier, is the figure used to determine the influence of any of the 30 components that make up the price-weighted Dow industrials DJIA, +0.28% The Dow isn’t exactly an average of its components, as its name might imply; instead, the value of the Dow is determined by calculating the sum of the prices of its components using a divisor that factors when a company splits its shares.

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