Urban Investor's Dictionary: The Dow Jones

We hear about it everyday. The Dow is up, The Dow is down, but what does it really mean?

Charles Dow (Left) & Edward Jones (Right). Financial prowess aside, these guys had some impressive facial hair

In 1882 Charles Dow and Edwards Jones together with Charles Bergstresser founded what would become one of the largest and most prominent business and financial news firms on the planet - Dow Jones & Company . The name is taken after Charles and Edward's surnames respectively. They would also go on to form The Wall Street Journal in 1889 - which to this day is still one of the leading and most influential financial publications.

In 1884 Charles Dow - who also served as editor of The Wall Street Journal - began recording stock averages. The first which grouped together 9 railroads and two industrial companies was the precursor to the Dow Jones Transportation Average. Charles Dow was grouping together stocks from businesses of similar nature to create an overall average to gauge the performance of the market.

Charles' second index is also his most notable. Known by its many monikers - DJI, Industrial Average, Dow 30, or just The Dow - the Dow Jones Industrial Average, in its modern incarnation, serves as an index that indicates the performance of 30 large publicly owned companies based in the United States during a standard trading session in the stock market. The original Dow Jones Industrial was published on May 26 1896, and consisted of 12 industrials. General Electric is the only of the original 12 to remain on the index, but check out this list of the other 11.

In order to come up with the calculation, Charles Dow used a weighted average - stocks with higher values are given a higher weight in the index. The divisor for the Dow has been adjusted over time to keep the index from being affected by market events, political events, war, and natural disaster. The Dow has maintained its importance and influence over the years because it provides an overview of American economic performance. When you hear people say "the market is up" it is almost always a direct reference to the Dow.
In 1928, at the height of the roaring 20's the Dow increased it's index to 30 in accordance with the changing economic tides. Since then there have been several shifts as stocks have been moved in and out of the index. In 2015 Apple Inc. was added.
Check out a complete list of the current 30 on the Dow Jones Industrial Average - many which aren't even industrial, but they all serve to give a cross section of the American economy and its performance.
Company Exchange Symbol Industry Date Added Notes
3M NYSE MMM Conglomerate 1976-08-09 as Minnesota Mining and Manufacturing
American Express NYSE AXP Consumer finance 1982-08-30
Apple NASDAQ AAPL Consumer electronics 2015-03-19
Boeing NYSE BA Aerospace and defense 1987-03-12
Caterpillar NYSE CAT Construction and mining equipment 1991-05-06
Chevron NYSE CVX Oil & gas 2008-02-19 also 1930-07-18 to 1999-11-01
Cisco Systems NASDAQ CSCO Computer networking 2009-06-08
Coca-Cola NYSE KO Beverages 1987-03-12 also 1932-05-26 to 1935-11-20
DuPont NYSE DD Chemical industry 1935-11-20 also 1924-01-22 to 1925-08-31
ExxonMobil NYSE XOM Oil & gas 1928-10-01 as Standard Oil of New Jersey
General Electric NYSE GE Conglomerate 1907-11-07 also 1896-05-26 to 1898-10 and 1899-04-21 to 1901-04-01
Goldman Sachs NYSE GS Banking , Financial services 2013-09-20
The Home Depot NYSE HD Home improvement retailer 1999-11-01
IBM NYSE IBM Computers and technology 1979-06-29 also 1932-05-26 to 1939-03-04
Intel NASDAQ INTC Semiconductors 1999-11-01
Johnson & Johnson NYSE JNJ Pharmaceuticals 1997-03-17
JPMorgan Chase NYSE JPM Banking 1991-05-06
McDonald's NYSE MCD Fast food 1985-10-30
Merck NYSE MRK Pharmaceuticals 1979-06-29
Microsoft NASDAQ MSFT Software 1999-11-01
Nike NYSE NKE Apparel 2013-09-20
Pfizer NYSE PFE Pharmaceuticals 2004-04-08
Procter & Gamble NYSE PG Consumer goods 1932-05-26
Travelers NYSE TRV Insurance 2009-06-08
UnitedHealth Group NYSE UNH Managed health care 2012-09-24
United Technologies NYSE UTX Conglomerate 1939-03-14 as United Aircraft
Verizon NYSE VZ Telecommunication 2004-04-08
Visa NYSE V Consumer banking 2013-09-20
Wal-Mart NYSE WMT Retail 1997-03-17
Walt Disney NYSE DIS Broadcasting and entertainment 1991-05-06

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