Others were broken up, taken over, dissolved, or relegated to subsidiary status over the years. Like any observer, Dow saw that many or most stocks tended to move like a wave in the same direction from day to day as investors reacted to events and expectations. He sought to put a number on that daily movement.
Dow chose 12 of the biggest and most influential corporations of the day. Each was a giant in its sector, and most reflected demand for the raw materials that fed the American economy, like coal, sugar, and oil.
At the close of every trading day, he added up all of their stock prices and divided by That was the Dow Jones Industrial Average. The timing was auspicious. The United States was emerging from a recession caused by the collapse in of Philadelphia and Reading Railroads. Even with trouble in the railroad industry, economic activity was booming. Coal remained the dominant fuel for transportation, while gas and electricity were in demand.
Crops were a major export, while also providing sustenance to Americans. As the country's industrial age came to a close, electricity became the dominant energy source and led to numerous technological advancements that were embraced by consumers. The economy shifted toward providing more consumer goods and technology-based services and products. Most of the original companies in the DJIA were removed from the list long before they went out of business.
Then and now, the list of Dow components is revised periodically to remove companies that can no longer be seen as bellwethers and to substitute companies that have climbed to prominence.
In , the Dow was expanded to include 30 companies. These companies have changed over the years, but the index still aims to represent the U. The following are the first 30 Dow stocks, following the expansion:.
Below is a list of the companies included in the Dow as of August Library of Congress. PR Newswire. US Markets. Stock Markets. The most recent update to the index took effect on August 31, The 30 Dow companies are now:.
This flaw quickly became known when companies announced stock splits and other transactions that modified their nominal share prices. To make their shares more affordable, a growing company may double its number of outstanding shares by splitting them 2 to 1. Some critics argue against ignoring the market capitalization of a firm. They state that an index tied to stocks' prices is not as accurate as one tied to their market value.
Under the original calculation for the Dow Jones Industrial Average, this cosmetic change would result in the DJIA falling even if the stock were to increase in value. To compensate, the divisor of the DJIA is often changed for corporate events and stock actions, such as special dividends and stock splits. The Dow Jones Industrial Average has changed quite a bit over the past years and will keep changing as the economy shifts.
While it isn't the broadest measure of economic health, the Dow's history and makeup can help you decipher a common financial term. Many mutual funds replicate exposure to the Dow Jones Industrial Average. Buying shares in those mutual funds is like buying pieces of the Dow.
Some are general ESG indices for a specific region, such as the U. Others have specific exclusions for specific regions, such as a European index that excludes companies that deal in firearms, tobacco, alcohol, gambling, or adult entertainment.
Library of Congress Business Reference Services. Accessed May 21, Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. Create a personalised content profile. Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Need assistance? Use our online form to ask a librarian for help. In the years since the Dow Jones Industrial Average DJIA was first introduced on May 26, , it has been regularly quoted in news broadcasts, newspapers, and journals as an indicator of financial markets and economic conditions in the United States.
It was published in the Customer's Afternoon Letter , a daily financial news bulletin which was the precursor to The Wall Street Journal. The name changed in to the current Transportation Average. The first calculation of the DJIA was comprised of stocks of twelve different companies in the industrial sector.
The average started at These companies were selected specifically to represent major areas of the U. By the number of stocks rose to 20 and again rose to 30 in While General Electric is the only one of the original 12 stocks that is still listed although it was removed and reinstated twice , many of the other original 12 have merged into other companies, which are included in the DIJA.
His work was originally intended to create a "window" into the market and economy versus as opposed to developing a "formal theory" of market movements however, Dow's works and ideas eventually evolved with contributions from his colleagues and became known posthumously as "Dow Theory.
The Dow Jones Industrial Average is now comprised of thirty 30 major American publicly traded companies. If you have any further questions, please Ask A Librarian. Dow, and history resources centering around stock speculation. The following titles link to fuller bibliographic information in the Library of Congress Online Catalog. Links to digital content are provided when available. The following resources created or digitized by the Library of Congress can be used to find out more about the index and Charles H.
Dow as well as the events of the day. Additional works on this topic in the Library of Congress may be identified by searching the Library of Congress Online Catalog under appropriate Library of Congress subject headings. Choose the topics you wish to search from the following list of subject headings to link directly to the Catalog and automatically execute a search for the subject selected.
Please be aware that during periods of heavy use you may encounter delays in accessing the catalog. For assistance in locating other subject headings that may relate to this subject, please consult a reference librarian. Search this Guide Search. This Month in Business History.
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