What Is the Dow Jones Industrial Average (DJIA)?

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https://www.investopedia.com/terms/d/djia.asp
What Is the Dow Jones Industrial Average (DJIA)?

The Dow Jones Industrial Average (DJIA) is a stock market index that tracks 30 large, publicly-owned blue-chip companies trading on the New York Stock Exchange (NYSE) and Nasdaq. The Dow Jones is named after Charles Dow, who created the index in 1896 along with his business partner, Edward Jones. Also referred to as the Dow 30, the index is considered to be a gauge of the broader U.S. economy.1

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关键词：Industrial ndustrial average Jones trial

KEY TAKEAWAYS
The Dow Jones Industrial Average is a widely-watched benchmark index in the U.S. for blue-chip stocks.
The DJIA is a price-weighted index that tracks 30 large, publicly-owned companies trading on the New York Stock Exchange and the Nasdaq.
The index was created by Charles Dow in 1896 to serve as a proxy for the broader U.S. economy.
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The DJIA's composition can change over time based on economic trends.
The Dow Divisor is a constant that was created to address the simple average issue.

Understanding the Dow Jones Industrial Average (DJIA)
The DJIA is the second-oldest U.S. market index after the Dow Jones Transportation Average. The DJIA was designed to serve as a proxy for the health of the broader U.S. economy. Often referred to simply as the Dow, it is one of the most-watched stock market indexes in the world. While the Dow includes a range of companies, all of them can be described as blue-chip companies with consistently stable earnings.
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In the early 20th century, the performance of industrial companies was typically tied to the overall growth rate in the economy. That cemented the relationship between the Dow's performance and the overall economy. Even today, for many investors, a strong-performing Dow equals a strong economy while a weak-performing Dow indicates a slowing economy.
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As the economy changes over time, so does the composition of the index. A component of the Dow may be dropped when a company becomes less relevant to current trends of the economy, to be replaced by a new name that better reflects the shift. For instance, a company may be removed from the index when its market capitalization drops because of financial distress.
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Stocks with higher share prices are given greater weight in the index. So a higher percentage move in a higher-priced component will have a greater impact on the final calculated value. At the Dow's inception, Charles Dow calculated the average by adding the prices of the 12 Dow component stocks and dividing by 12. The result was a simple average. Over time, there were additions and subtractions to the index that had to be accounted for, such as mergers and stock splits. At that point, a simple mean calculation no longer made sense.
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The Dow Divisor and Index Calculation
The Dow Divisor was created to address the simple average issue. The divisor is a predetermined constant that is used to determine the effect of a one-point move in any of the approximately 30 stocks that comprise the Dow. There have been instances when the divisor needed to be changed so that the value of the Dow stayed consistent. As of February 2024, the Dow Divisor was 0.15265312230608.

The Dow is not calculated using a weighted arithmetic average and does not represent its component companies' market cap unlike the S&P 500. Rather, it reflects the sum of the price of one share of stock for all the components, divided by the divisor. Thus, a one-point move in any of the component stocks will move the index by an identical number of points.

DJIA Price = SUM (Component Stock Prices) ÷ Dow Divisor
The S&P 500 has outperformed the DJIA on an annualized basis over the last three-, five-, and 10-year periods.

S&P Dow Jones Indices. "S&P 500."

Dow Jones Industrial Average (DJIA) Index Components
The DJIA launched in 1896 with just 12 companies, primarily in the industrial sector. They included railroads, cotton, gas, sugar, tobacco, and oil. The index grew to 30 components by 1928. Since then, it's changed many times—the very first came three months after the 30-component index launched. The first large-scale change was in 1932 when eight stocks in the Dow were replaced.

The Dow is reevaluated regularly. Companies are replaced when they no longer meet the index's listing criteria with those that do. Over time, the index became a bellwether of the U.S. economy, reflecting economic changes. For example, U.S. Steel was removed from the index in 1991 and replaced by building material company Martin Marietta.

Other major changes to the DJIA came:

In 1997, when Westinghouse Electric, Bethlehem Steel, Texaco, and Woolworths were replaced by Travelers' Group, Johnson & Johnson, Hewlett-Packard, and Walmart.
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In 1999, when Chevron, Sears Roebuck, Union Carbide, and Goodyear Tire were dropped while Home Depot, Intel, Microsoft, and SBC Communications were added in their place.
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Walgreens Boots Alliance replaced General Electric in June 2018. In August 2020, Salesforce, Amgen, and Honeywell were added to the Dow, replacing ExxonMobil, Pfizer, and Raytheon Technologies. Raytheon joined the DJIA earlier that year after United Technologies merged with Raytheon Company.

Amazon replaced Walgreens in February 2024 after Walmart's stock split, which reduced its weight on the index.

DowDuPont spun off DuPont and was replaced by Dow Chemical Company in 2019.

Dow. "Dow Completes Separation From DowDuPont."

The table below lists the companies included in the DJIA alphabetically as of September 2023:
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State Street Global Advisors SPDR. "SPDR Dow Jones Industrial Average ETF Trust." (Click on Download All Holdings: Daily)


Dow Jones Industrial Average Components
Company        Symbol        Year Added
3M        MMM        1976
Amazon        AMZN        2024
American Express        AXP        1982
Amgen        AMGN        2020
Apple        AAPL        2015
Boeing        BA        1987
Caterpillar        CAT        1991
Chevron        CVX        2008
Cisco Systems        CSCO        2009
The Coca-Cola Company        KO        1987
Dow        DOW        2019
Goldman Sachs        GS        2013
The Home Depot        HD        1999
Honeywell        HON        2020
IBM        IBM        1979
Intel        INTC        1999
Johnson & Johnson        JNJ        1997
JPMorgan Chase        JPM        1991
McDonald's        MCD        1985
Merck & Co.        MRK        1979
Microsoft        MSFT        1999
NIKE        NKE        2013
Procter & Gamble        PG        1932
Salesforce        CRM        2020
The Travelers Companies        TRV        2009
UnitedHealth Group        UNH        2012
Verizon        VZ        2004
Visa        V        2013
Walmart        WMT        1997
The Walt Disney Company        DIS        1991

Historical Milestones
The following are some important historical milestones achieved by the Dow:

March 15, 1933: The largest one-day percentage gain in the index happened during the 1930s bear market, totaling 15.34%. The Dow gained 8.26 points and closed at 62.10.
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Oct. 19, 1987: The largest one-day percentage drop took place on Black Monday. The index fell 22.61%. There was no evident explanation for the crash, although program trading may have been a contributing factor.
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Sept. 17, 2001: The fourth-largest one-day point drop—and the largest at the time—took place on the first day of trading following the 9/11 attacks in New York City. The Dow dropped 684.81 points or about 7.1%; however, it is important to note that the index had been dropping before Sept. 11, losing more than 1,000 points between Jan. 2 and Sept. 10. The DJIA started to make traction after the attacks and regained all of what it lost, closing above 10,000 for the year.
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May 3, 2013: The Dow surpasses the 15,000 mark for the first time in history.
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Jan. 25, 2017: The Dow closes above 20,000 points for the first time.
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Jan. 4, 2018: The index closes at 25,075.13, the first close above 25,000 points.
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Jan. 17, 2018: The Dow closes at 26,115.65, the first close above 26,000 points.
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Feb. 5, 2018: The Dow falls a record 1,175.21 points.
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Dec. 26, 2018: The Dow records its largest one-day point gain of 1,086.25.
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July 11, 2019: The Dow breaks 27,000 for the first time in its history.
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Feb. 12, 2020: The Dow hits its pre-pandemic high of 29,551.
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March 2020: The Dow Jones crashes with back-to-back record down days amid the global coronavirus pandemic, breaking below 20,000 and falling 3,000 points in a single day amid several 2,000 and 1,500 up and down moves. It officially entered bear market territory on March 11, 2020, ending the longest bull market in history that began in March 2009.
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Nov. 16, 2020: The Dow finally breaks its pre-COVID-19 high, reaching 29,950.44 points.
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Nov. 24, 2020: The Dow breaks the 30,000 level for the first time, closing at 30,045.84.
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July 2021: On July 12, 2021, the Dow trades above 35,000 for the first time. On July 23, 2021, it closes above 35,000 for the first time.
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Nov. 2021: The Dow trades above 36,000 for the first time.
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Jan. 4, 2022: The Dow hits 36,799.65, an all-time high at the time.
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May 16, 2024: The Dow surpasses 40,000 for the first time, reaching an all-time high of 40,051.05 during intraday trading.
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