Dow Jones Industrial Average (DJIA) is one of the most crucial stock indexes of companies listed on the New York Stock Exchange and NASDAQ Composite.
The Dow Jones index stands for Dow Jones Industrial Average (DJIA) and was created by Charles Dowa over 100 years ago. DJIA in the first period of its existence included only 11 companies, mainly from the railway industry. Today, however, most of the indexed companies have little to do with the industry.
What is the Dow Jones index
Currently, the Dow Jones index is based on an average of 30 so-called blue-chips that are leaders in their sectors. One thing to keep in mind is that the index is not limited to the industrial sector - even if its name suggests it. This index is stable and changes very rarely. Mainly due to possible acquisitions that may occur between companies.
The Dow Jones index is the oldest in the United States, and it’s used as a general indicator of the economic trend and investors' decisions on the capital market. When we hear information reports that the market has "gone up (or down)," this often refers to the results of the Dow index. Simplicity makes the Dow Today more understandable to the community and reliably indicates market trends.
Dow - Past and Present
Dow Jones was published for the first time on May 26, 1896. At that time, it consisted of shares of 12 companies. Only one of those 12 companies, General Electric, is still part of the index (with a break in 1898-1907).
During the first publication, the index rate was 40.94 points. In 1916, the portfolio of shares increased to 20, and in 1928 to 30 companies.
On October 24, 1929, the day that passed into history as a Black Thursday, was the first day of a sharp sale of shares on the New York Stock Exchange. Despite attempting to calm the situation the next day, on 28 and 29 October, DJIA lost 12.82% and 11.73% respectively.
For the first time, the Dow Jones reached 1,000 points on November 14, 1972. In the 1980s and 1990s, investors observed its significant increase.
At that time as well, what took place was the most significant percentage drop in value in the history of the index. On this day, the Dow Jones Industrial Average lost 22.6% of its value. However, it did not take much time to recover, and after just a few weeks, shares returned to their previous rates.
The highest value in this period that Dow reached on January 14, 2000, was 11,222.98 points.
After the next 6 years and 9 months, the index exceeded only 12,000 points. The attacks on the World Trade Center and the Pentagon on September 11, 2001, and the subsequent turbulence affected the slow growth.
However, with the collapse of Lehman Brothers and the credit crisis in the US as well as in the world, Dow fell significantly in value at the end of 2008 and at the beginning of 2009. The lowest shares in that period in 12 years took place on March 9, 2009 - 6 647.05. Dow made up for the losses at the end of 2009 due to the support of the US monetary policy.
At the trading session on January 25, 2017, the Dow Jones index exceeded 20,000 for the first time in history.
Today, the value of the Dow index is around 25.679.90. This is mainly the result of very good prosperity, which has been maintained in the United States and other economically stable countries for a quite long time.
The Dow Today includes: 3M, American Express, Apple, Boeing, Caterpillar, Chevron, Cisco, Coca-Cola, Disney, Dow Chemical, Exxon Mobil, Goldman Sachs, Home Depot, IBM, Intel, Johnson & Johnson, JPMorgan Chase, McDonald's, Merck, Microsoft, Nike, Pfizer, Procter & Gamble, Travelers Companies Inc., United Technologies, UnitedHealth, Verizon, Visa, Wal-Mart, Walgreen.
Adding and Removing Companies from the Dow Index
From the beginning, from time to time, the companies on the Dow Index have been changing. On 20 September 2013, Goldman Sachs, Nike, and Visa were added, and Alcoa, Bank of America and Hewlett-Packard were removed. In 2015, the place of AT&T took Apple, and on June 26, 2018, the Walgreens Boots Alliance replaced General Electric.
There are several reasons why companies are removed or added to the Dow Jones index. The reason for the last changes by the Index Committee (which decides on membership) were further diversifications of economic sectors in the index and the fact that stock prices of companies that left the index were considered too low.