Dow Jones Industrial Average

The Dow Jones Industrial Average is a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States. First calculated on May 26, 1896, the index is the second-oldest among the U.S. market indices. It was created by Charles Dow, the editor of The Wall Street Journal and the co-founder of Dow Jones & Company.

About Dow Jones Industrial Average in brief

Summary Dow Jones Industrial AverageThe Dow Jones Industrial Average is a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States. First calculated on May 26, 1896, the index is the second-oldest among the U.S. market indices. It was created by Charles Dow, the editor of The Wall Street Journal and the co-founder of Dow Jones & Company. The word industrial in the name of the index no longer reflects its composition: several of the constituent companies operate in sectors of the economy other than heavy industry. Investing in the DJIA is possible via index funds as well as via derivatives such as option contracts and futures contracts. The ten components with the largest dividend yields are commonly referred to as the Dogs of the Dow. The index has changed 55 times since its beginning in 1896. General Electric had the longest continuous presence on the index, beginning in the original index in 1896 and ending in 2018. The Dow remained stuck in a range between 53 and 53 points until late 1914. Many of the biggest moves in the Dow occurred during the summer of 1896 during the Panic of 1896. At the start of the 1900s, the Dow halted its momentum as it worked its way through two financial crises: 1901 and 1907. It reached a peak of 78.38 in 1890, but all but one of all the all-time highs were in the late 1890s and early 1900s. It broke 100 points for the first time in 1906; the index broke 100 again in 1906. It is not weighted by market capitalization, and does not use a weighted arithmetic mean.

Many consider the Dow to be an inadequate representation of the overall U. S. stock market compared to broader market indices such as the S&P 500 Index or Russell 3000 because it includes only 30 large cap companies. The value of theIndex is the sum of the stock prices of the companies included in the index,. divided by a factor which is currently ) approximately 0. 152. The factor is changed whenever a constituent company undergoes a stock split so that the value ofThe index is unaffected by the stock split. As of August 31, 2020, the components of theDJIA have changed 55 years since the index was created. The number of stocks represented in what is now the Dow Jones Transportation Average dropped from 14 to 12, as the Central Pacific Railroad and Central Railroad of New Jersey were removed. Though comprising the same number of companies, this index contained only one of the original twelve industrials that would eventually form Dow’s most famous index. In 1884, Charles Dow composed his first stock average, which contained nine railroads and two industrial companies that appeared in the Customer’s Afternoon Letter, a daily two-page financial news bulletin which was the precursor to The Wall St Journal. The Chicago Board Options Exchange issues option contracts on the Dow through the root symbol DJX. Options on various Dow-underlying ETFs are also available for trading. Some ETFs use leverage or short strategies to magnify price movements.