The Dow Jones and the Dow Jones Industrial Average

Dow Jones & Company is one of the biggest business and financial news companies in the world. Three reporters by the name of Charles Dow, Edward Jones and Charles Bergstresser founded the firm back in 1882. Dow Jones & Company has several products and assets under it andout of all of those; the Dow Jones Industrial Average (DJIA) is one of the most prominent.

Four years after the founding of Dow Jones & Company, the firm would launch their second oldest index, the Dow Jones Industrial Average right after the Dow Jones Transportation Average in 1884 which indexes the transport sector. The index initially had 12 companies, one of which still exists today which is General Electric. At present the index has 30 companies.

Calculation

The DJIA is a price-weighted index which means stocks that have more weight in the index have higher share prices. At the beginning of the DJIA, the average was calculated by adding the prices of the 12 components and dividing it by 12. As time went on, mergers and stock splits were accounted for in the index.

Overtime Changes

In 1928 the index had 30 components and has changed components in 51 times. Eight stocks in the index had to be replaced in 1932 which included the Coca-Cola Company and Procter & Gamble Co. with both still part of the DJIA today. Apple, Inc. replaced AT&T, Inc. due to a recent change that happened back in 2015.

Components

          The DJIA currently has 30 components:

  • Apple
  • American Express
  • Boeing
  • Caterpillar
  • Cisco Systems
  • Chevron
  • Coca-Cola
  • DuPont
  • ExxonMobil
  • General Electric
  • Goldman Sachs
  • Home Depot
  • IBM
  • Intel
  • Johnson & Johnson
  • JPMorgan Chase
  • McDonald’s
  • 3M Company
  • Merck
  • Microsoft
  • Nike
  • Pfizer
  • Procter & Gable
  • The Travelers
  • UnitedHealth
  • United Technologies
  • Visa
  • Verizon
  • Wal-Mart
  • Walt Disney