The Dow Jones Industrial Average: A Definition and History
What is the Dow Jones Industrial Average?
The Dow Jones Industrial Average (DJIA) is a stock market index that measures the performance of 30 large, publicly-traded companies listed on stock exchanges 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. stock market.
The DJIA was created by Charles Dow and Edward Jones in 1896. The index originally tracked the performance of 12 industrial companies, but has since been expanded to include 30 companies from a variety of industries.
How is the Dow Jones Industrial Average Calculated?
The DJIA is calculated by dividing the total market value of the 30 companies in the index by a divisor. The divisor is adjusted periodically to account for stock splits and other corporate actions.
What are the Components of the Dow Jones Industrial Average?
The 30 companies that make up the DJIA are selected by the editors of The Wall Street Journal. The companies are chosen based on their size, industry representation, and financial performance.
The current components of the DJIA are:
``` 1. 3M Company 2. American Express Company 3. Apple Inc. 4. Boeing Company 5. Caterpillar Inc. 6. Chevron Corporation 7. Cisco Systems Inc. 8. Coca-Cola Company 9. Dow Inc. 10. ExxonMobil Corporation 11. Goldman Sachs Group Inc. 12. Home Depot Inc. 13. Honeywell International Inc. 14. Intel Corporation 15. International Business Machines Corporation (IBM) 16. JPMorgan Chase & Co. 17. Johnson & Johnson 18. McDonald's Corporation 19. Merck & Co. 20. Microsoft Corporation 21. Nike Inc. 22. Procter & Gamble Company 23. Salesforce Inc. 24. Travelers Companies Inc. 25. UnitedHealth Group Incorporated 26. Verizon Communications Inc. 27. Visa Inc. 28. Walmart Inc. 29. Walgreens Boots Alliance Inc. 30. Walt Disney Company ```How is the Dow Jones Industrial Average Used?
The DJIA is used by investors, analysts, and economists to track the performance of the U.S. stock market. It is also used as a benchmark for investment performance and as a basis for financial derivatives.
The DJIA is a widely-followed index, and its movements are often reported in the news and financial media. It is a valuable tool for understanding the performance of the U.S. stock market and making investment decisions.
