What Is The Dow Jones Industrial Average?

Most market observers think the S&P 500 is a much better representation of the economy, as it includes 500 companies and draws more widely from different sectors. 5This was the Dow’s close at the peak of the 1920s bull market on Tuesday, September 3, 1929 before the stock market crash. This level would not be seen again until Tuesday, November 23, 1954, more than 25 years later. A secular bull market is a period in which the stock market index is continually reaching all-time highs with only brief periods of correction, as during the 1990s, and can last upwards of 15 years. A cyclical bull market is a period in which the stock market index is reaching 52-week or multi-year highs and may briefly peak at all-time highs before a rapid decline, as in the early 1970s.

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The Dow Jones is seeing a wide sweep of bullish momentum on Friday, with all but five of the securities listed on the major index testing higher on the last day of trading for the week. Across the sector space, telecoms and tech companies are on the soft side, with industrials, consumer discretionaries, and financials finding the high side of the boards. Over time, the Dow Jones Index evolved and expanded its scope to include various sectors beyond just industrial companies. The composition of the index has changed numerous times as companies have been added or removed to maintain its relevance and representativeness.

The Dow Jones Industrial Average is called the Dow Jones because it was developed by Charles Dow and Edward Jones at Dow Jones & Company. Although the Dow Jones Industrial Average rarely changes, there are occasional additions and deletions. These changes often come in batches and always keep total membership at 30 companies. Dow Jones & Company is the firm founded by Charles Dow, Edward Jones, and Charles Bergstresser in 1882, not the people themselves.

The following is a list of the record closes of the Dow Jones Industrial Average grouped by year since May 26, 1896. 14This was the Dow’s close at the peak on January 14, 2000 before the dot-com crash. After the end of the second World War, the Dow started another recovery that ultimately led to the all-time closing high set back in 1929.

1. In 1882, they established Dow Jones & Company as a prominent financial news and information company, which went on to become a leading source of business and market data and later developed the Dow Jones Index in 1892.
2. Both the US 30 and the S&P 500 are indexes tasked with tracking the performance of U.S. companies.
3. This is especially visible when comparing to larger, more robust indices such as the S&P 500, which have both greater constituent numbers, arguably less sector bias, and different weighting methods.
4. The selection is not based on strict quantitative criteria but rather on the decisions of the editors of The Wall Street Journal.

Here are the details on the Dow Jones Industrial Average, including which companies are included in the index and how it is calculated. In the world of finance, you’ll often hear people ask, «How did New York do today?» or «How did the market perform today?» In both cases, these people are likely referring to the DJIA, as it is the most widely-used index. It is more popular than both the S&P 500 Index, which tracks 500 stocks, and the Nasdaq Composite Index, which includes more than 2,500 U.S. and international equities. As of 2024, Dow Jones & Company continued to be a major source of financial news.

Is the Dow Jones Useful as an Economic Benchmark?

Any change in the share price of any Dow-listed company affects the value of the index equally, in accordance with Charles Dow’s original vision. But it’s important to realize that, on a percentage basis, the movements of the highest-priced stocks have the greatest impact on the index’s value. This calculation ensures that changes in the price of any individual component do not disproportionately impact the index. In the fast-paced world of investing, understanding key market indices is essential for making informed decisions and maximizing returns.

Tech sector investors have decided that Nvidia’s (NVDA) 93% YoY earnings growth in the third quarter wasn’t enough to keep bids on the high end; NVDA is down over 3% on Friday and trading at $142 per share. Boeing rose over 4.5% on Friday, testing into $150 per share as investors pick up the airplane manufacturer and developer with eyes on the company’s backlog of customer orders worth an estimated $500 billion. The company’s ability to execute on those a complete guide to the futures market orders has apparently not factored into the equation, with at least two plane models under FAA review. Boeing also has plans on the books for the company to axe 17,000 workers or ten percent of its entire workforce.

Charles Dow created various market averages to more accurately define which fundamental analysis vs. technical analysis rundown way » industrial stocks» or » transportation stocks» were headed. Like most other stock market indices, the Dow undergoes periods of general increase and general declines or stagnation. A bull market is a term denoting a period of price increases, while a bear market denotes a period of declines. Wall Street generally considers a bear market in session when multiple broad market indices have a downturn of 20% or more in value lasting for at least 2 months. The Dow Jones Industrial Average is a stock index that tracks 30 of the largest U.S. companies. Created in 1896, it is one of the oldest stock indexes, and its performance is widely considered as a useful indicator of the health of the entire U.S. stock market.

After closing above 2,000 in January 1987,44 the largest one-day percentage drop occurred on Black Monday, October 19, 1987, when the average fell 22.61%. That makes it a hot topic of debate and, according to many pundits, a key barometer of the state of the overall stock market and economy. Many critics argue that the Dow doesn’t truly represent the state of the whole U.S. economy, given that it consists only of 30 large-cap U.S. companies.