Urban Investor's Dictionary: The Dow Jones

We hear about it everyday. The Dow is up, The Dow is down, but what does it really mean?

Charles Dow (Left) & Edward Jones (Right). Financial prowess aside, these guys had some impressive facial hair

In 1882 Charles Dow and Edwards Jones together with Charles Bergstresser founded what would become one of the largest and most prominent business and financial news firms on the planet - Dow Jones & Company. The name is taken after Charles and Edward's surnames respectively. They would also go on to form The Wall Street Journal in 1889 - which to this day is still one of the leading and most influential financial publications.


In 1884 Charles Dow - who also served as editor of The Wall Street Journal - began recording stock averages. The first which grouped together 9 railroads and two industrial companies was the precursor to the Dow Jones Transportation Average. Charles Dow was grouping together stocks from businesses of similar nature to create an overall average to gauge the performance of the market.

Charles' second index is also his most notable. Known by its many monikers - DJI, Industrial Average, Dow 30, or just The Dow - the Dow Jones Industrial Average, in its modern incarnation, serves as an index that indicates the performance of 30 large publicly owned companies based in the United States during a standard trading session in the stock market. The original Dow Jones Industrial was published on May 26 1896, and consisted of 12 industrials. General Electric is the only of the original 12 to remain on the index, but check out this list of the other 11.

In order to come up with the calculation, Charles Dow used a weighted average - stocks with higher values are given a higher weight in the index. The divisor for the Dow has been adjusted over time to keep the index from being affected by market events, political events, war, and natural disaster. The Dow has maintained its importance and influence over the years because it provides an overview of American economic performance. When you hear people say "the market is up" it is almost always a direct reference to the Dow.
In 1928, at the height of the roaring 20's the Dow increased it's index to 30 in accordance with the changing economic tides. Since then there have been several shifts as stocks have been moved in and out of the index. In 2015 Apple Inc. was added.
Check out a complete list of the current 30 on the Dow Jones Industrial Average - many which aren't even industrial, but they all serve to give a cross section of the American economy and its performance.
CompanyExchangeSymbolIndustryDate AddedNotes
3MNYSEMMMConglomerate1976-08-09as Minnesota Mining and Manufacturing
American ExpressNYSEAXPConsumer finance1982-08-30
AppleNASDAQAAPLConsumer electronics2015-03-19
BoeingNYSEBAAerospace and defense1987-03-12
CaterpillarNYSECATConstruction and mining equipment1991-05-06
ChevronNYSECVXOil & gas2008-02-19also 1930-07-18 to 1999-11-01
Cisco SystemsNASDAQCSCOComputer networking2009-06-08
Coca-ColaNYSEKOBeverages1987-03-12also 1932-05-26 to 1935-11-20
DuPontNYSEDDChemical industry1935-11-20also 1924-01-22 to 1925-08-31
ExxonMobilNYSEXOMOil & gas1928-10-01as Standard Oil of New Jersey
General ElectricNYSEGEConglomerate1907-11-07also 1896-05-26 to 1898-10 and 1899-04-21 to 1901-04-01
Goldman SachsNYSEGSBanking, Financial services2013-09-20
The Home DepotNYSEHDHome improvement retailer1999-11-01
IBMNYSEIBMComputers and technology1979-06-29also 1932-05-26 to 1939-03-04
IntelNASDAQINTCSemiconductors1999-11-01
Johnson & JohnsonNYSEJNJPharmaceuticals1997-03-17
JPMorgan ChaseNYSEJPMBanking1991-05-06
McDonald'sNYSEMCDFast food1985-10-30
MerckNYSEMRKPharmaceuticals1979-06-29
MicrosoftNASDAQMSFTSoftware1999-11-01
NikeNYSENKEApparel2013-09-20
PfizerNYSEPFEPharmaceuticals2004-04-08
Procter & GambleNYSEPGConsumer goods1932-05-26
TravelersNYSETRVInsurance2009-06-08
UnitedHealth GroupNYSEUNHManaged health care2012-09-24
United TechnologiesNYSEUTXConglomerate1939-03-14as United Aircraft
VerizonNYSEVZTelecommunication2004-04-08
VisaNYSEVConsumer banking2013-09-20
Wal-MartNYSEWMTRetail1997-03-17
Walt DisneyNYSEDISBroadcasting and entertainment1991-05-06
PayPath
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