Dow Jones Industrial Average

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graph of the DJIA from 1901 until today

The Dow Jones Industrial Average (, also called the DJIA, Dow 30, or informally the Dow Jones or The Dow) is one of several stock market index created by nineteenth century The Wall Street Journal editor and Dow Jones & Company co-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, aside from the Dow Jones Transportation Average, which Dow also created.

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 mean, not the actual arithmetic mean of the prices of its component stocks—the sum of the component prices is divided by a divisor, which changes over time, to generate the value of the index.

==History==. Two days later it rose 10.15%.. Exchanges were closed between September 10th and September 17th.First published on May 26, 1896, the DJIA represented the average of twelve stocks from various important American industries. Of those original twelve, only General Electric remains part of the average. The other eleven were:

American Cotton Oil Company, distant ancestor of Bestfoods, now part of Unilever
American Sugar Company, now Amstar Holdings
American Tobacco Company, broken up in 1911 antitrust action
Chicago Gas Company, bought by Peoples Gas Light in 1897 (now an operating subsidiary of Integrys Energy Group, Inc.)
Distilling & Cattle Feeding Company, now Millennium Chemicals, a division of Lyondell Chemical Company
Laclede Gas Light Company, still in operation as The Laclede Group, removed from the Dow Jones Industrial Average in 1899
National Lead Company, now NL Industries, removed from the Dow Jones Industrial Average in 1916
North American Company, (Edison) electric company broken up in the 1940s
Tennessee Coal, Iron and Railroad Company in Birmingham, Alabama, bought by U.S. Steel in 1907
U.S. Leather Company, dissolved 1952
United States Rubber Company, changed its name to Uniroyal in 1961, merged private with B.F. Goodrich in 1986, bought by Michelin in 1990

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. Many of the biggest percentage price moves in The Dow occurred early in its history, as the nascent industrial economy matured.

The index hit its all-time low of 28.48 during the summer of 1896.

The index closed at 71.42 on July 30, 1914 and so did the New York Stock Exchange for the next four months. Some historians believe the reason for this was worry that markets would plunge because of panic over the onset of the World War I. An alternative explanation is that Secretary of the Treasury, William McAdoo closed the exchange because he wanted to conserve the US gold stock in order to launch the Federal Reserve System later that year with enough gold to keep the US on the gold standard. That first day it reopened on December 12, 1914, the index closed at 74.56, thus the War had not had the predicted impact.

In 1916, the number of stocks in the index was increased to twenty and the new version of the index was 27% smaller than the old index. Finally, it was increased to thirty stocks in 1928, near the height of the "roaring 1920s" bull market. The crash of 1929 and the ensuing Great Depression returned the average to its starting point, almost 90% below its peak, by July 8, 1932. The highs of September 3, 1929 would not be surpassed until 1954.

The largest one-day percentage gain in the index, 15.34%, happened on March 15, 1933, in the depths of the 1930s bear market.
The post-World War II bull market, which brought the market well above its 1920s highs, lasted until 1966.
On November 14, 1972 the average closed above 1,000 (1,003.16) for the first time, during a relatively brief rally in the midst of a lengthy bear market.

The 1980s and especially the 1990s saw a very rapid increase in the average, though severe corrections did occur along the way.

The largest one-day percentage drop since 1914 occurred on "Black Monday (1987)", October 19, 1987, when the average fell 22.61%.
The largest one-day percentage gain since the 1930s, 10.15%, occurred two days later on Wednesday, October 21, 1987 bringing the Dow back above 2,000 and in line for a yearly gain.
On November 21, 1995 the DJIA closed above 5,000 (5,023.55) for the first time.
On March 29, 1999, the average closed above the 10,000 mark (10,006.78) after flirting with it for two weeks. This prompted a celebration on the trading floor, complete with party hats.
On May 3, 1999, the Dow achieved its first close above 11,000 (11,014.70).

The uncertainty of the early 2000s brought a significant bear market.

On January 14, 2000, the DJIA reached a record high of 11,750.28 in trading before settling at a record closing price of 11,722.98; these two records would not be broken until October 3, 2006.
The largest one-day point gain in the Dow, an advance of 499.19, or 4.93%, occurred on March 16, 2000, as the broader market approached its top.
The largest one-day point drop in DJIA history 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 that week, the Dow had fallen 1,369.70 points, or 14.3%. A recovery attempt allowed the average to close the year above 10,000.
By mid-2002, the average had returned to its 1998 level of 8,000.
On October 9, 2002, the DJIA bottomed out at 7,286.27 (intra-day low 7,197.49), its lowest close since October 1997.
By the end of 2003, 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 2001.
In October 2006, four years after its bear market low, the DJIA set fresh record theoretical, intra-day, daily close, weekly, and monthly highs for the first time in almost seven years, closing above 12,000 for the first time on the 19th anniversary of Black Monday (1987).
On February 27, 2007, the Dow Jones Industrial Average fell 415.30 points, its biggest point drop since 2001, to close at 12,216.96 points. This move confirmed a correction that eventually reached below the 12,000 level. The initial drop was caused by a global sell-off after Chinese stocks experienced a mini-crash.
On April 25, 2007, the Dow passed 13,000 in trading and closed above the milestone for the first time. Less than three months later, on July 19, the average set an all-time closing high above the 14,000 level: the fastest 1,000-point advance for the index since 1999.
On July 26 2007, the DJIA experienced a 450 point intraday loss, followed by a partial recovery of 311.50 points, to close at 13,473.57. This came on the heels of turbulence in the U.S. Subprime lending market, and the soaring value of the Chinese yuan. Gold Eagle Financial News Financial Markets Magazine news This initiated another correction that has reached (so far) about 10% from the highs back to the upper 12,000 range and has brought increased volatility, with routine 1% moves and occasional moves of greater than 2% in a single session (which had been extremely rare since March 2003). While the average has been back above 13,000 consistently during September, it generally remained 5% or more from its record levels until September 18, 2007, when the Federal Reserve cut its overnight interest rate and discount rate targets by half a percentage point each to 4.75% and 5.25%, respectively: the Dow gained 335.97 points (2.5%) to close at 13,739.39 (highest since July), its largest one-day jump since October 15, 2002 and its biggest percent rise since April 2, 2003. The index opened the fourth quarter of 2007 by setting new record highs above the 14,000 point milestone.

Note: For current record highs, please see Closing Milestones of the Dow Jones Industrial Average

Criticism With the current inclusion of only 30 stocks, some argue the DJIA cannot function as an index of overall market performance even though it is the most cited and most widely recognized of the stock market indices. Historically, though, it has performed very much in line with the broader U.S. market.

Additionally, the DJIA is criticized for being a price-weighted average, which gives relatively higher-priced stocks more influence over the average than their lower-priced counterparts. For example, a $1 increase in a lower-priced stock can be negated by a $1 decrease in a much higher-priced stock, even though the first stock experienced a larger percentage change. Many critics of the DJIA recommend the float-adjusted market-value weighted S&P 500 or the Dow Jones Wilshire 5000, the latter of which includes all U.S. securities with readily available prices, as better indicators of the U.S. market.

Another issue with the Dow is that not all 30 components open at the same time in the morning. Only a few components open at the start and the posted opening price of the Dow is determined by the price of those few components that open first and the previous day's closing price of the remaining components that haven't opened yet; therefore, the posted opening price on the Dow will always be close to the previous day's closing price (which can be observed by looking at Dow price history) and will never accurately reflect the true opening prices of all its components. Thus, in terms of Candlestick chart, the Dow's posted opening price cannot be used in determining the condition of the market.

Companies comprising the DJIA The individual components of the DJIA are occasionally changed as market conditions warrant. They are selected by the editors of The Wall Street Journal. When companies are replaced, the scale factor used to calculate the index is also adjusted so that the value of the average is not directly affected by the change.

On November 1, 1999, Chevron Corporation, Goodyear Tire and Rubber Company, Sears, Roebuck and Company, and Union Carbide were removed from the DJIA and replaced by Intel, Microsoft, Home Depot, and SBC Communications. Intel and Microsoft became the first two companies traded on the NASDAQ exchange to be listed in the DJIA. On April 8, 2004, another change occurred as International Paper, AT&T, and Eastman Kodak were replaced with Pfizer, Verizon, and American International Group. On December 1, 2005 AT&T's original T symbol returned to the DJIA as a result of the SBC Communications and AT&T merger.

The Dow Jones Industrial Average consists of the following 30 companies:http://www.djindexes.com/mdsidx/index.cfm?event=components&symbol=DJI{]|()|Diversified Industrials|-|Alcoa|-|[Altria Group, [foods]|()|Consumer Finance|()|Full Line [Insurance|()|[Telecoms|()|[Aerospace manufacturer & Defense contractor|-|Caterpillar, Inc.|()|Commercial vehicle & Trucks|-|Citigroups|-|[The Coca-Cola Company|()|Beverages]|()|Commodity Chemical industry|-|ExxonMobil|()|Diversified Industrials|-|[General Motorss|-|[Hewlett-Packards|-|[Home Depot retailers|-|[Honeywell|()|[Semiconductors|()|[Computer Services|()|[List of pharmaceutical companies|-|JPMorgan Chase|()|[Restaurants & Bar (establishment)|-|Merck & Co.|()|List of pharmaceutical companies|-|Microsoft|-|[Pfizer|-|[Procter & Gamble|()|Aerospace|-|[Verizon Communications|-|[Wal-Marts|-|[The Walt Disney Company|()|Broadcasting & Entertainment|} Calculation To calculate the DJIA, the sum of the prices of all 30 stocks is divided by a DJIA divisor. The divisor is adjusted in case of splits, spinoffs or similar structural changes, to ensure that such events do not in themselves alter the numerical value of the DJIA. The initial divisor was the number of component companies, so that the DJIA was at first a simple arithmetic average; the present divisor, after many adjustments, is less than one (meaning the index is actually larger than the sum of the prices of the components).That is: \text{DJIA} = {\sum p \over d} where p are the prices of the component stocks and d is the Dow Divisor.

Events like stock splits or changes in the list of the companies composing the index alter the sum of the component prices. In these cases, in order to avoid discontinuity in the index, the Dow divisor is updated so that the quotations right before and after the event coincide:

\text{DJIA} = {\sum p_\text{old} \over d_\text{old} } = {\sum p_\text{new} \over d_\text{new} }

See also

Closing milestones of the Dow Jones Industrial Average
Dow Jones Transportation Average
Dow Theory
Dowism
New York Stock Exchange
DJIA divisor

References External links

Google Finance page for DJIA
Yahoo! Finance page for DJIA
Dow Jones & Company Website
History of Stock Market Indexes
The Dow Jones Industrial Average Celebrates 110 Years
Dow Jones Industrial Average (DJIA) and USA Corporate Profits Research
Seeking Alpha coverage of the Dow ETF
Industry Classification Benchmark for Dow Jones Indexes (United States) and FTSE Indexes (United Kingdom) (pdf)
Cap. weighted DJIA calculation

Performance

Chart of DJIA performance (1928–present) — Linear scale
Chart of DJIA performance (1928–present) — Logarithmic scale
Listing of quotes for all DJIA components

American Cotton Oil Company, distant ancestor of Bestfoods, now part of Unilever
American Sugar Company, now Amstar Holdings
American Tobacco Company, broken up in 1911 antitrust action
Chicago Gas Company, bought by Peoples Gas Light in 1897 (now an operating subsidiary of Integrys Energy Group, Inc.)
Distilling & Cattle Feeding Company, now Millennium Chemicals, a division of Lyondell Chemical Company
Laclede Gas Light Company, still in operation as The Laclede Group, removed from the Dow Jones Industrial Average in 1899
National Lead Company, now NL Industries, removed from the Dow Jones Industrial Average in 1916
North American Company, (Edison) electric company broken up in the 1940s
Tennessee Coal, Iron and Railroad Company in Birmingham, Alabama, bought by U.S. Steel in 1907
U.S. Leather Company, dissolved 1952
United States Rubber Company, changed its name to Uniroyal in 1961, merged private with B.F. Goodrich in 1986, bought by Michelin in 1990

The index hit its all-time low of 28.48 during the summer of 1896.

The largest one-day percentage gain in the index, 15.34%, happened on March 15, 1933, in the depths of the 1930s bear market.
The post-World War II bull market, which brought the market well above its 1920s highs, lasted until 1966.
On November 14, 1972 the average closed above 1,000 (1,003.16) for the first time, during a relatively brief rally in the midst of a lengthy bear market.

The 1980s and especially the 1990s saw a very rapid increase in the average, though severe corrections did occur along the way.

The largest one-day percentage drop since 1914 occurred on "Black Monday (1987)", October 19, 1987, when the average fell 22.61%.
The largest one-day percentage gain since the 1930s, 10.15%, occurred two days later on Wednesday, October 21, 1987 bringing the Dow back above 2,000 and in line for a yearly gain.
On November 21, 1995 the DJIA closed above 5,000 (5,023.55) for the first time.
On March 29, 1999, the average closed above the 10,000 mark (10,006.78) after flirting with it for two weeks. This prompted a celebration on the trading floor, complete with party hats.
On May 3, 1999, the Dow achieved its first close above 11,000 (11,014.70).

The uncertainty of the early 2000s brought a significant bear market.

On January 14, 2000, the DJIA reached a record high of 11,750.28 in trading before settling at a record closing price of 11,722.98; these two records would not be broken until October 3, 2006.
The largest one-day point gain in the Dow, an advance of 499.19, or 4.93%, occurred on March 16, 2000, as the broader market approached its top.
The largest one-day point drop in DJIA history 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 that week, the Dow had fallen 1,369.70 points, or 14.3%. A recovery attempt allowed the average to close the year above 10,000.
By mid-2002, the average had returned to its 1998 level of 8,000.
On October 9, 2002, the DJIA bottomed out at 7,286.27 (intra-day low 7,197.49), its lowest close since October 1997.
By the end of 2003, 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 2001.
In October 2006, four years after its bear market low, the DJIA set fresh record theoretical, intra-day, daily close, weekly, and monthly highs for the first time in almost seven years, closing above 12,000 for the first time on the 19th anniversary of Black Monday (1987).
On February 27, 2007, the Dow Jones Industrial Average fell 415.30 points, its biggest point drop since 2001, to close at 12,216.96 points. This move confirmed a correction that eventually reached below the 12,000 level. The initial drop was caused by a global sell-off after Chinese stocks experienced a mini-crash.
On April 25, 2007, the Dow passed 13,000 in trading and closed above the milestone for the first time. Less than three months later, on July 19, the average set an all-time closing high above the 14,000 level: the fastest 1,000-point advance for the index since 1999.
On July 26 2007, the DJIA experienced a 450 point intraday loss, followed by a partial recovery of 311.50 points, to close at 13,473.57. This came on the heels of turbulence in the U.S. Subprime lending market, and the soaring value of the Chinese yuan. Gold Eagle Financial News Financial Markets Magazine news This initiated another correction that has reached (so far) about 10% from the highs back to the upper 12,000 range and has brought increased volatility, with routine 1% moves and occasional moves of greater than 2% in a single session (which had been extremely rare since March 2003). While the average has been back above 13,000 consistently during September, it generally remained 5% or more from its record levels until September 18, 2007, when the Federal Reserve cut its overnight interest rate and discount rate targets by half a percentage point each to 4.75% and 5.25%, respectively: the Dow gained 335.97 points (2.5%) to close at 13,739.39 (highest since July), its largest one-day jump since October 15, 2002 and its biggest percent rise since April 2, 2003. The index opened the fourth quarter of 2007 by setting new record highs above the 14,000 point milestone.

Closing milestones of the Dow Jones Industrial Average
Dow Jones Transportation Average
Dow Theory
Dowism
New York Stock Exchange
DJIA divisor

References External links

Google Finance page for DJIA
Yahoo! Finance page for DJIA
Dow Jones & Company Website
History of Stock Market Indexes
The Dow Jones Industrial Average Celebrates 110 Years
Dow Jones Industrial Average (DJIA) and USA Corporate Profits Research
Seeking Alpha coverage of the Dow ETF
Industry Classification Benchmark for Dow Jones Indexes (United States) and FTSE Indexes (United Kingdom) (pdf)
Cap. weighted DJIA calculation

Performance

Chart of DJIA performance (1928–present) — Linear scale
Chart of DJIA performance (1928–present) — Logarithmic scale
Listing of quotes for all DJIA components

^DJI: Summary for DOW JONES INDUSTRIAL AVERAGE IN - Yahoo! Finance
Get detailed information on DOW JONES INDUSTRIAL AVERAGE IN (^DJI) including quote performance, Real-Time ECN, technical chart analysis, key stats, insider transactions, and the ...

DOW JONES INDUSTRIAL AVERAGE INDEX Quote
Notices and Terms: Confirm all data with your broker before trading. Quote data provided by Interactive Data. Historical prices provided by Prophet.

Dow Jones Industrial Average
Open: 11,609.25: High (day): 11,698.17: Low (day): 11,558.29: YTD%Change:-12.31% Volume: 264,528,225.00: Prev. Close: 11,602.50: 52-Week Range (Low - High): 10,827.71 - 14,198.10

Dow Jones Industrial Average
Open: 11,630.34: High (day): 11,634.49: Low (day): 11,409.61: YTD%Change:-13.88% Volume: 136,598,076.00: Prev. Close: 11,496.57: 52-Week Range (Low - High): 10,827.71 - 14,198.10

Dow Jones Industrial Average - Wikipedia, the free encyclopedia
The Dow Jones Industrial Average (NYSE: DJI), also called the DJIA, Dow 30, or informally the Dow Jones or The Dow) is one of several stock market indices created by nineteenth ...

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Dow Jones Indexes
Dow Jones Averages. The Dow Jones Industrial, Transportation and Utility Averages are maintained and reviewed by editors of The Wall Street Journal.

Dow Jones Indexes | Welcome
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