Dow Jones Industrial Average

The Dow Jones Industrial Average (shortened in DJIA and often shortened in Dow Jones ) is the oldest index of the Stock Exchange the oldest New York and Market index of the world.

This index is the property of Dow Jones & Company , which also publishes The Wall Street Journal .

History of the index and its evolution

1884 : foundation of the index by Charles Dow
1896: beginning of the publication of the index
August 1921 - September 1929: the index climbs of 468%
October 24th, 1929: Crash of 1929
1931: loss record of 52,67% over the year
October 19th, 1987: Crash of October 1987
January 14th, 2000: record at 11 722,98 points (immediately before the bursting of the bubble of the technological values)
October 19th, 2006: the index exceeds the symbolic mark of the 12.000 points
July 17th, 2007: the index exceeds for the first time of its history the bar of the 14.000 points

Composition of the index

The index includes/understands 30 Entreprise S important, but the companies present in the index changed with time. Only General Electric is present since the origins of the publication of the index.

At the beginning of 2006, the thirty companies using the composition of Dow Jones Industrial Average are:

3M (chemistry, electronics and maintenance)
Alcoa (aluminum)
Altria Group (in the past Philip Morris) (tobacco)
American Express (finance departments)
American International Group (insurances)
AT&T (telecommunications)
Boeing (aeronautical and aerospace)
Caterpillar Inc. (plant equipment)
Citigroup (finance departments)
Coca-Cola Co. (drink, agroalimentary)
Dupont (chemistry)
Exxon Mobil Corp. (oil)
General Electric (electronic, finance departments)
General Motors (automobile)
Hewlett-Packard (computer material)
Home Deposit (distribution of material of do-it-yourself)
International Honeywell (electronic)
Intel Corp. (microprocessors)
International Business Machines (hardware, software and data processing departments)
Johnson & Johnson Corporation (pharmacy)
JPMorgan Drives out & Co. (finance departments)
McDonald's Corporation (fast-food industry)
Merck & Co. Inc. (pharmacy)
Microsoft Corporation (software)
Pfizer Inc. (pharmacy)
Procter & Gamble (maintenance, pharmacy, food)
United Technologies (aerospace, defense)
Verizon (telecommunications)
Wal-Mart Blinds Inc. (large distribution)
Walt Disney Company (entertainment)

Calculation of the index

Dow Jones is the single market index in the world with being balanced on the value of the actions the component and not on their Market cap. This characteristic shows well the little of knowledge in economy at the time of the creation of the index. Because of this weakness and owing to the fact that the index is based on only 30 companies, the Dow Jones index was replaced by the index S&P 500 like the principal index of the performance of the US economy.

Although this index is very imperfect, one continues to publish it, partially for sentimental reasons (it is the oldest market index of the world!), but especially because it is the only evidence which enables us to see the evolution of the economy on more than 120 years.

The calculation of the index is since the origins, in a surprising way, the work of only two people. In an interview with the review Brill' S Content in 2000, one of these two people declared: “I do not have exceptional competence out of purse, if not you think well that I would be in this moment to gild me under the coconuts instead of working in an office”.

The index was during a time calculated hour per hour with the hand; then it was computerized in 1963.

Anecdote

Most important of the firms of the index to its creation, was a company manufacturing of the leather belts out of for agricultural machinery.

See too

Market index, contains inter alia several bonds towards other market indexes
Indice S&P 500

External bonds

historical Composition of the DJIA
Dow Jones
Little story of the DJIA

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