The Dow Jones Industrial Average, a price-weighted indicator of 30 large, publicly-traded U.S. corporations that The Wall Street Journal editors select to represent the stock market in its entirety. This average was created by Charles Dow, Wall Street Journal editor. There are two versions of the Industrial Average, including all 30 stocks, or the DJIA (which only includes 20 stocks from the original Dow Jones selection in 1896).
Google Finance updates each company’s point value every day. This includes its share price and the amount it has changed since yesterday.
What is the Dow Jones Industrial Average? (DJIA).
The Dow Jones Industrial Average (DJIA), also called the Dow 30 and a stock market index tracks 30 large blue-chip publicly-owned companies that trade on the New York Stock Exchange or the NASDAQ. Charles Dow, along with Edward Jones, was the inventor of the Dow Jones.
The DJIA is the second-oldest U.S. index. The Dow Jones Transportation Average was the first. The DJIA was created to be a proxy for U.S. economic health.
A short history of the Dow Jones Industrial Average
Charles Dow created the Dow Jones Industrial Average, a reporter from The Wall Street Journal, co-founded Dow Jones & Company with Charles Bergstresser and Edward Jones in 1882.
The Dow Jones Industrial Average began as an index that included 12 companies. Most of the original companies were companies in the industrial sector, including General Electric (NYSE.GE). As the Index’s focus shifted from the performance of heavy industrial sectors to the overall health of the U.S. stock market, the number and variety of stocks included in it increased. Since 1928, the Index has tracked stocks from 30 companies.
Understanding The Dow Jones Industrial Average
The DJIA, often referred to as simply “the Dow,” is one of the most closely watched stock market indexes around the globe. Although the Dow is made up of various companies, it can all be described as blue-chip businesses with stable earnings. The Walt Disney Company, Walmart, and Microsoft Corporation are just a few of the companies included in the Dow.
The Index was only 12 companies when it first launched in 1896. These companies were mainly in the industrial sector. They included railroads, tobacco, gas, sugar, and oil. The DJIA was a spin-off from the Dow Jones Transportation Average, making it the second oldest stock exchange index in the United States.
The performance of industrial companies was often tied to the economy’s overall growth rate in the early 20th century. This established a strong relationship between Dow’s performance and the overall economy. Investors still consider a strong Dow to be a strong economy. A weak Dow is indicative of a slowing economy.
The Index’s composition changes with the economy. If a company is no longer relevant to current economic trends, a component of Dow could be removed to make way for a new name that better represents the shift.
The Dow could remove a company from its ranks if it loses a significant amount of its market capitalization because of financial distress. Market capitalization measures the company’s value by multiplying its outstanding shares by its stock price.
Higher share prices have a greater weight in the Index. A higher percentage of shares traded in a high-priced component will have an impact on the final value. Charles Dow, the founder of Dow, calculated the average value by adding the prices for the Dow components and then dividing the result by twelve. The result was a simple average. Over time, there have been many additions and subtractions to the Index, such as stock splits and mergers. These had to be taken into account. A simple mean calculation was no longer possible.
Can you buy Dow Jones stock? How do you buy Dow Jones stock?
Although you cannot buy stock in Dow Jones Industrial Average, portfolio exposure can be gained to the Dow’s performance and those of the companies in the Index. There are many investment options available to you:
All 30 companies that make up the Dow Jones Industrial Average can be bought shares. It’s possible to purchase stock directly from every 30 companies included in the Dow Jones Industrial Average. Brokers don’t usually charge commissions for trades. Many allow fractional share investment, which will enable you to buy shares in part. This investment option requires you to manage 30 stocks and make changes to the portfolio when the index changes. However, historically the Index has changed only once every few years.
Purchase shares in an ETF that is Dow-focused.
The SPDR Dow Jones Industrial Average (NYSEMKT.DIA) is an exchange-traded fund that tracks the Dow’s performance. It provides portfolio exposure to all 30 Dow companies. ETFs are easier than investing in 30 companies. You don’t have to change your portfolio if the Dow companies list changes. This SPDR ETF charges an annual management fee, which is the same as for most ETFs. A fee of $1.60 per $1,000 invested equals an expense ratio of 0.1%.
Invest in Dow options and futures contracts. Dow options contracts can be purchased through the Cboe Global Markets NYSEMKT CBOE options exchange or Dow futures contracts via the CME Group’s (NASDAQ: CME) Chicago Mercantile Exchange. This type of security is best for experienced investors who have a lot of investing knowledge. Options and futures can be very lucrative but can also result in substantial losses.
The Dow Jones Industrial Average is a great starting point for novice investors looking to expand their portfolios by investing in large-cap stocks. This is especially true if your goal is to invest in blue-chip companies, which are the most stable and financially profitable.
Google Finance History
Google Finance was launched for the first time by Google on March 21, 2006. Google Finance was launched on March 21, 2006. Stock information and Adobe Flash-based stock price charts, which included marks for significant news events as well as corporate actions, were available. The site also aggregated Google News Google Blog Search articles on each corporation. However, links were not screened and are often deemed untrustworthy.
Google launched a new version of its finance website on December 12, 2006. It features a refreshed homepage design that allows users to see currency information, U.S. market performance, and a list of top market movers. Google Trends also included a section titled “Top Movers,” which was based on the popularity of specific keywords. Charts containing data up to 40 years for the U.S. were also included in the upgrade.
Stocks and more decadent portfolio options. A new update added real-time stock ticker updates to the site. The NASDAQ New York Stock Exchange and Google partnered in June 2008.
Google added advertising to its finance pages on November 18, 2008. It hasn’t been updated since 2008, and the Google Finance Blog closed in August 2012.
Google announced on September 22, 2017, that the website is currently under renovation. Portfolio features will not be available after mid-November 2017.
The website was redesigned in early 2018. The notice stated that the portfolio feature would be removed and offered to download stocks from the old portfolio to the new website. It also advised that users could choose to download the portfolio in a CSV file. In 2015, the Google Play Store removed the Google Finance mobile app.
Index Calculation and Dow Divisor
The Dow Divisor was created to calculate the impact of any one-point change in any of the 30 stocks that make up the Dow. In some cases, the divisor had to be modified to maintain the Dow’s value. The Wall Street Journal has the current divisor at 0.14748071991788.
The Dow does not use a weighted average or represent the market capitalization of its constituent companies (unlike S&P 500). It is the sum of all components’ stock prices divided by the divisor. An index move of one point in any component stock will result in an equal number of issues.
Dow Index Components
It is common for the Index to be re-evaluated to replace companies that don’t meet the listing criteria. The Index reached its current level in 1928 with 30 components. Since then, its composition has changed 60 times.
Three months after the launch of the 30 component index, the first change took place. There were many changes made to the Index’s components over its first few years, up until about 1929. Eight Dow stocks were replaced in 1932 by the first significant change.
Record Highs for the Dow Jones Industrial Average
Lyn Alden Lyn Alden Last week, the Dow Jones Industrial Average (DJIA) and the S&P 500 reached new records.
Although the S&P 500 has been reaching higher levels in recent weeks, this is the first time since Jan that the Dow Jones Industrial Average has fully recovered from its losses this year and set a new record.
Chart Source: Google Finance. The Dow Jones Industrial Average tracks only 30 of America’s most prominent blue-chip companies instead of the 500 companies that the S&P 500 tracks. Most Dow Jones Industrial Average companies are also part of the S&P 500 (and therefore in the C Fund); however, overall, the Index has lower technology exposure.
International Convergence
We’ve seen a slight recovery in the last few weeks after a summer where international stocks outperformed U.S. stock markets.
Emerging markets have gained around 5% in the past two weeks, while developed markets (including I Fund) have gained approximately 4% over their lowest levels. Although international stocks are still a significant underperformer this year, it appears that the recent sell-off may have stabilized.
The Turkish lira, the Argentine peso, and the U.S. dollars seem to have stabilized. Part of the global sell-off this summer was caused by currency weakness in smaller countries.
After imposing steel and aluminum import taxes, the United States imposed 25% tariffs on $50 Billion worth of Chinese exports to America. China responded by placing tariffs on the $50 billion value of American exports to China.
China’s currency also fell from 6.3 yuan to USD to 6.8yuan to USD. Some analysts believe this may have been intentional by China to offset the tariff impact. Some tariffs are offset by a weaker yuan, which effectively makes it cheaper to buy Chinese products.
Trump announced a new round of tariffs against China this week. If there isn’t a deal, it will be 10% tariffs on $200billion of Chinese exports. The tariff rate will rise to 25% by the year’s end. Certain Apple products and other items, such as bike helmets, are not included in the tariffs.
China responded by imposing 5-10% tariffs on an additional $60 billion worth of U.S. exports. However, their premier (second in the government after their president) also stated that China would not deliberately devalue its currency.
Last week, the market was relaxed because the trade war did not escalate as quickly as many analysts expected. There were broad gains in U.S. stocks as well as international stocks, including China’s.
The Wall Street Journal reported on Friday that China had canceled upcoming trade negotiations with America.
This is an oversized news item that will impact stock market performance. We’ll be watching how it develops in the coming weeks. Economists believe that China’s tariffs could reduce their GDP growth by 0.5% to 1%, compared to their current GDP growth rate, over 6%. And the impact to the United States in the short/intermediate-term is that these U.S. tariffs will likely raise prices on several goods for U.S. businesses and consumers. It will be difficult to predict how these tariffs will impact the U.S. trade deficit against China. This will likely take place well into 2019.
The U.S. stock exchange is currently at a relaxed level. The market’s volatility index is currently below 12, one of its lowest levels for the year.
The Dow Jones Industrial Average Index is a proxy index for the U.S. industry and production.
The Dow Jones Industrial Average index, commonly abbreviated DJIA, is a composite of the stocks of 30 large, publicly traded companies listed on the NYSE and NASDAQ. It tracks the development of the American economy and financial markets.
The Dow Jones index was first created in the late 19th century. While initially focused on heavy industry, it later included companies from other sectors. It is calculated by adding one share of stock for each company to the total (with some correcting variables) and is widely regarded as a reference index of economic activity in blue-chip American businesses.
The market capitalization does not weigh the Dow index, and it only includes 30 companies. These are not the 30 largest American corporations. Therefore, the S&P 500 is considered more representative of the U.S. stock markets and the broader economy.
Download our Excel file on the S&P 500 Companies. It contains the complete list and extensive digital information about the 500 largest U.S. companies. Download our Excel files for the Russell 1000 companies Russell 2000 company Russell 3000 companies. Evolution of the Dow Jones Industrial Average in 5 Years.
