The Dow Jones Industrial Average: A 120-Year History

Dow Jones Industrial Average (DJIA)

The Dow Jones Industrial Average (DJIA) is a stock market index that tracks the performance of 30 of the largest publicly traded companies in the United States. It is one of the most widely followed stock market indices in the world and is often used as a barometer of the overall health of the U.S. economy.

History of the Dow Jones Industrial Average

The DJIA was created on May 26, 1896, by Charles Dow and Edward Jones, the founders of Dow Jones & Company. The index initially consisted of 12 companies, including General Electric, American Tobacco, and National Lead. Over the years, the number of companies in the index has changed, and the current 30 companies were added between 1928 and 1991.

How the Dow Jones Industrial Average is Calculated

The DJIA is calculated by dividing the total market capitalization of the 30 companies in the index by a divisor that is adjusted to ensure that the index does not change too drastically when a company is added or removed. The divisor is currently 0.1520545403.

Importance of the Dow Jones Industrial Average

The DJIA is an important indicator of the overall health of the U.S. economy. It is used by investors, analysts, and policymakers to track the performance of the stock market and to make decisions about investing. The DJIA is also used by the media to report on the performance of the stock market and to provide commentary on the economy.