from Dr. Greg Valentine, Director
Center for Economic Education at USI
A service for players of the Stock Market Game
Who is DOW JONES Anyway?
Published by the
Evansville Courier Company
Tuesday, November 17, 1998
The Dow Jones Industrial Average (DJIA) is not a person but an indicator of what the market did on a particular day. The average actually began in 1884 when journalist Charles H. Dow (an employee of the Kiernan News Agency) met Jones & Company and selected 11 companies (nine railroads, Pacific Mail Steamship, and Western Union) as representatives of the market, added the closing prices of those stocks, and divided by 11 to obtain the first average.
In 1928, the DJIA grew to 30 companies. Some of the original companies from the 1928 list remain on the DJIA, although all are much changed. Those companies that make up the Dow today are: Allied Signal, Inc.; Aluminum Can*; American Express; AT&T; Boeing; Caterpillar' Chevron; Coca-Cola; Walt Disney; DuPont; Eastman Kodak; Exxon*; General Electric*; General Motors*; Goodyear Tire*; Hewlett-Packard; IBM; International Paper; Johnson & Johnson; McDonald; Merc, 3M; J.P. Morgan; Philip Morris*; Procter & Gamble; Sears*; Travelers; Union Carbide*; United Technologies; and Wal-Mart. These stocks are chosen from among companies with large market value, extensive ownership by individuals and institutional investors, showing consistent earnings and dividends, and having a leading position in an important industry.
To determine the "DOW" today, a special divisor was developed as a price-weighted average to accommodate changes in the number of shares outstanding and other events such as stock splits, dividends, and substitutions and/or mergers.
* indicates original 30 companies on the DJIA in 1928.
The above article was taken from the Evansville Courier Company. Watch each week for more background information about the stock market.