At the end of the 19th century, the stock market did not have any indicators that could describe all the processes that take place there every day. Some advanced investors preferred to use fixed-rate bonds, which would guarantee minimal risk. At the same time, common stocks were considered an unreliable way to make a profit (partly due to the huge number of speculators).
In order to streamline the situation on the market a little, Charles Dow (one of the Dow Jones & Company`s founders) developed a special index — the shares of 12 large companies that belonged to influential state-owned railway corporations were used to compile it. Later, the formula was improved, Dow Jones historical index included 20 companies.
From October 1896, it began to be published annually in The Wall Street Journal. However, the general industrial index appeared much later, after the death of its creator — in 1929.
What is the Dow Jones Index in detail?
At the moment, the Dow Jones Industrial Average is one of the oldest parameters. Starting with 12 and later 20 companies, now his formula is based on 30 companies. This index allows you to fairly accurately track the state of the financial market and is actively used not only in the United States, but also in the economy of the whole world. A host of market analysis platforms present the Dow Jones index live with actual changes — modern investors can track the state of the economy efficiently and at any time.
That’s why if a customer wants the most reliable financial information in 2022, then Dow Jones & Company is considered an excellent source. What’s more, the brand isn’t limited to publications, as it also provides key nuances with links to Barron’s, MarketWatch and, of course, The Wall Street Journal.
An interesting fact is that at the moment the company is not the main regulator of the index of the same name, which was created more than 100 years ago. At the moment it belongs to the enterprise of Dow Jones Indices LLC.
The Dow Jones Industrial Average (DJIA)
To make the most of the index, you should understand that Dow Jones and Dow Jones Industrial Average are not the same thing. Generally, the DJIA is often referred to simply as “Dow” for short. It is undeniably the most important stock index in the world, and the Dow Jones companies list includes world leaders such as Microsoft, Boeing, Coca-Cola and Apple.
Previously, it consisted mainly of large industrial brands that sold energy, tobacco, cotton, sugar, or were engaged in the construction of the railway, but time has made adjustments. And by the way, this is the main reason for the demand for this index — many financial experts say that the state of the country’s industry directly affects the state of the entire economy. Of course, the economy now depends on a complex of different factors, but the DJIA is still considered an indicator of its “health”.
Important! The index is considered fairly stable and rarely changes. However, if changes are made, then the total number of enterprises in the brand remains 30.
However, the DJIA is not the only important index of the company, it also has other interesting ones that allow customers to describe the performance of other economic sectors. For example, the Dow Jones Transportation Index, which includes 20 well-known transportation organizations (providing air transportation & delivery services), or the Dow Jones Utility Average, based on data from 15 utility sector companies.
When discussing the importance of this index, it is worth remembering that when experts ask something like “How did the market work today?”, they mean the DJIA. It is noteworthy that its popularity is even higher than the demand for the Nasdaq Composite, which consists of 2,500 shares (some American, some international). In addition, by studying the statistics on the index, specialists can conduct excellent analytics, finding the “best” and “worst” years of the market through the decades.
Dow Jones companies
Discussing the DJIA, experts will definitely mention that the index is based on the shares of the thirty largest companies. For the summer of 2022, the list consists of the following brands:
- 3M Co
- American Express Co
- Apple Inc
- Boeing Co
- Caterpillar Inc
- Chevron Corp
- Cisco Systems
- Coca-Cola Co
- Dow Inc
- Goldman Sachs Group
- Home Depot Inc
- Honeywell International Inc
- Intel Corp
- International Business Machines Corp
- Johnson & Johnson
- JP Morgan Chase & Co
- McDonald’s Corp
- Merck & Co Inc
- Microsoft Corp
- Nike Inc
- Procter & Gamble Co
- Salesforce Inc
- Travelers Companies Inc
- UnitedHealth Group Inc
- Verizon Communications Inc
- Visa Inc
- Walgreens Boots Alliance Inc
- Walt Disney Co