Dow Jones Industrial Average Index
The Dow Jones Industrial Average (NYSE: DJI) is one of several stock market indices created by Wall Street Journal editor and Dow Jones & Company founder Charles Dow. Dow compiled the index as a way to gauge the performance of the industrial component of America's stock markets. It is the oldest continuing U.S. market index.
Today, the average consists of 30 of the largest and most widely held public companies in the United States. The "industrial" portion of the name is largely historical - many of the 30 modern components have little to do with heavy industry. To compensate for the effects of stock splits and other adjustments, it is currently a weighted average, not the actual average of the prices of its component stocks.
When it was first published, the index stood at 40.94. It was computed as a direct average, by first adding up stock prices of its components and dividing by the number of stocks. In 1916, the number of stocks in the DJIA was increased to twenty, and finally to thirty in 1928. On November 14, 1972 the average closed above 1,000 (1,003.16) for the first time.
The 1980s and especially the 1990s saw a very rapid increase in the average. On November 21, 1995 it closed above 5,000 (5,023.55) for the first time and on March 29, 1999 the average closed at 10,006.78 which was the first time the index closed above the 10,000 mark. Just over a month later on May 3, 1999, it closed at 11,014.70, its first close above 11,000. The average closed at an all-time peak of 11,722.98 on January 14, 2000. By mid-2002 however, it had returned to its 1998 level of 8000. On October 9, 2002, the DJIA bottomed out at 7286.27 (intra-day low 7197.49), its lowest close since October 1997. By the end of 2003, however, the Dow returned to the 10,000 level. On January 9, 2006 the average broke the 11,000 barrier for the first time since June 2000, closing at 11,011.90.
The largest one-day percentage drop in the history of Dow Jones was on December 12, 1914, 24.39%. The largest one-day percentage drop in the last 50 years occurred on "Black Monday" in 1987 when the average fell 22.6%. The largest one-day point drop occurred on September 17, 2001, the first day of trading after the September 11, 2001 attacks, when the Dow fell 684.81 points or 7.1%. By the end of the week of September The Dow Jones Industrial Average consists of the following 30 companies:
- 3M Co. (NYSE: MMM) (conglomerates, "manufacturing")
- ALCOA Inc. (NYSE: AA) (aluminum)
- Altria Group, Inc. (NYSE: MO) (tobacco, foods)
- American International Group, Inc. (NYSE: AIG) (property & casualty insurance)
- American Express Co. (NYSE: AXP) (credit services)
- AT&T Inc. (NYSE: T) (telecoms)
- Boeing Co., The (NYSE: BA) (aerospace/defense)
- Caterpillar, Inc. (NYSE: CAT) (farm & construction equipment)
- Citigroup, Inc. (NYSE: C) (money center banks)
- Coca-Cola Co. (NYSE: KO) (beverages)
- E.I. du Pont de Nemours & Co. (NYSE: DD) (chemicals)
- Exxon Mobil Corp. (NYSE: XOM) (major integrated oil & gas)
- General Electric Co. (NYSE: GE) (conglomerates, media)
- General Motors Corporation (NYSE: GM) (auto manufacturers)
- Hewlett-Packard Co. (NYSE: HPQ) (diversified computer systems)
- Home Depot, Inc. (NYSE: HD) (home improvement stores)
- Honeywell International, Inc. (NYSE: HON) (conglomerates)
- Intel Corp. (NASDAQ: INTC) (semiconductors)
- International Business Machines Corp. (NYSE: IBM) (diversified computer systems)
- JPMorgan Chase and Co. (NYSE: JPM) (money center banks)
- Johnson & Johnson Inc. (NYSE: JNJ) (consumer and health care products conglomerate)
- McDonald's Corp. (NYSE: MCD) (restaurant franchise)
- Merck & Co., Inc. (NYSE: MRK) (drug manufacturers)
- Microsoft Corp. (NASDAQ: MSFT) (software)
- Pfizer, Inc. (NYSE: PFE) (drug manufacturers)
- Procter & Gamble Co. (NYSE: PG) (consumer goods)
- United Technologies Corp. (NYSE: UTX) (conglomerates)
- Verizon Communications (NYSE: VZ) (telecoms)
- Wal-Mart Stores, Inc. (NYSE: WMT) (discount, variety stores)
- Walt Disney Co., The (NYSE: DIS) (entertainment)
The exact weightings for each component are published daily by Dow Jones.
Apart from investing in the individual stocks in the Dow Jones, there also is the option to invest in an exchange-traded fund (ETF) which represents ownership in a portfolio of the equity securities that comprise the DJIA. This ETF is called the Diamonds, and the ticker symbol is AMEX:DIA. The units of this ETF, therefore, represent an opportunity for the investor to achieve the same performance of the DJIA (minus fund expenses) and trade like any other stock on the Amex Exchange, so they can be bought on margin, sold short or held for the long term.
Source - "Wikipedia"