The Dow Jones Index at a Glance

If you’ve ever heard people refer to “the Dow” when talking about the stock market, they’re talking about the Dow Jones Industrial Average (DJIA). The Dow Index is one of the oldest and most studied indicators of the world’s financial health. Here are some more facts about the DJIA.

What Exactly Is the Dow Jones Index?

Despite what many people think, the DJIA isn’t a particular stock, nor is it the name of the stock market. It’s actually an index of 30 stocks that are major players in the American economy. They are averaged together, and experts all over the world look to that average as an indicator of how the rest of the stocks on the New York Stock Exchange are doing.

What Is Its History?

The DJIA isn’t new. As a matter of fact, it dates all the way back to 1896, when a man named Charles Dow created it. The original index included only 12 stocks, and most of them were commodities. They included:

  • American Cotton Oil
  • American Sugar
  • American Tobacco
  • Chicago Gas
  • US Rubber
  • US Leather Pfd.
  • Tennessee Coal & Iron
  • North American
  • National Lead
  • Laclede Gas
  • Distilling & Cattle Feeding
  • General Electric

Which Stocks Are Part of the Dow Jones?

Many of the stocks that make up the DJIA today are probably companies you are familiar with and even shop at from time to time, such as Walmart, Apple, Home Depot, Disney, Coca-Cola, Walgreens, McDonald’s, Verizon, Microsoft and Nike. The list is rounded out by financial, health care, oil and technology industry leaders along with a few others. These include:

  • Visa
  • United Health
  • Travels Companies Inc.
  • United Technologies
  • Procter & Gamble
  • Pfizer
  • Merck
  • JPMorgan Chase
  • Johnson & Johnson
  • Intel
  • IBM
  • Exxon Mobil
  • Goldman Sachs
  • DowDuPont
  • Cisco
  • Chevron
  • 3M
  • American Express
  • Caterpillar
  • Boeing

How Is It Calculated?

While the DJIA started out as a true average, today the stocks with the most shares carry the most weight in the index. And while the way it’s calculated has changed and probably will change over time, financial experts generally use a formula called the “Dow divisor” to come up with the number. It prevents a major fluctuation of one or two stocks from disrupting the entire index.

What Are Some Current Dow Jones Records?

Rarely does a day go by without some sort of mention of the Dow Jones on the news. Usually, it’s just a report of whether it’s up or down, but sometimes it breaks records and becomes a top story. On September 21, 2018, the index closed at a record high of 26,743.50, notes TheStreet. Compare that to January 12, 1906 when the Dow closed over 100 for the first time. On September 17, 2001, the Dow dropped over 684 points in a day, according to Investopedia. This was the first day trading had reopened since September 11.