# Dow Jones Industrial Average

### Options contracts

The Chicago Board Options Exchange (CBOE) issues option contracts on the Dow through the root symbol DJX. Options on various Dow-underlying ETFs are also available for trading.[10]

## Components

Since April 2, 2019, the Dow Jones Industrial Average has consisted of the following companies:

Company Exchange Symbol Industry Date Added Notes
3M NYSE NYSEMMM Conglomerate 1976-08-09 as Minnesota Mining and Manufacturing
American Express NYSE NYSEAXP Financial services 1982-08-30
Apple Inc. NASDAQ AAPL Information technology 2015-03-19
Boeing NYSE NYSEBA Aerospace manufacturer and Arms industry 1987-03-12
Caterpillar Inc. NYSE NYSECAT Construction and Mining 1991-05-06
Chevron Corporation NYSE NYSECVX Petroleum industry 2008-02-19 also 1930-07-18 to 1999-11-01
Cisco Systems NASDAQ CSCO Information technology 2009-06-08
The Coca-Cola Company NYSE NYSEKO Food industry 1987-03-12 also 1932-05-26 to 1935-11-20
Dow Inc. NYSE NYSEDOW Chemical industry 2019-04-02
ExxonMobil NYSE NYSEXOM Petroleum industry 1928-10-01 as Standard Oil of New Jersey
Goldman Sachs NYSE NYSEGS Financial services 2013-09-20
The Home Depot NYSE NYSEHD Retailing 1999-11-01
IBM NYSE NYSEIBM Information technology 1979-06-29 also 1932-05-26 to 1939-03-04
Intel NASDAQ INTC Information technology 1999-11-01
Johnson & Johnson NYSE NYSEJNJ Pharmaceutical industry 1997-03-17
JPMorgan Chase NYSE NYSEJPM Financial services 1991-05-06
McDonald's NYSE NYSEMCD Food industry 1985-10-30
Merck & Co. NYSE NYSEMRK Pharmaceutical industry 1979-06-29
Microsoft NASDAQ MSFT Information technology 1999-11-01
Nike NYSE NYSENKE Apparel 2013-09-20
Pfizer NYSE NYSEPFE Pharmaceutical industry 2004-04-08
Procter & Gamble NYSE NYSEPG Fast moving consumer goods 1932-05-26
The Travelers Companies NYSE NYSETRV Financial services 2009-06-08
UnitedHealth Group NYSE NYSEUNH Managed health care 2012-09-24
United Technologies NYSE NYSEUTX Conglomerate 1939-03-14 as United Aircraft
Verizon NYSE NYSEVZ Telecommunication 2004-04-08
Visa Inc. NYSE NYSEV Financial services 2013-09-20
Walmart NYSE NYSEWMT Retailing 1997-03-17
Walgreens Boots Alliance NASDAQ WBA Retailing 2018-06-26
The Walt Disney Company NYSE NYSEDIS Broadcasting and entertainment 1991-05-06

## Former components

As of April 2, 2019, the components of the DJIA have changed 53 times since its beginning on May 26, 1896. General Electric had the longest continuous presence on the index, beginning in 1907 and ending in 2018. Changes to the index since 1991 are as follows:

## History

### Precursor

DJIA monthly trading volume in shares from 1929 to 2012

In 1884, Charles Dow composed his first stock average, which contained nine railroads and two industrial companies that appeared in the Customer's Afternoon Letter, a daily two-page financial news bulletin which was the precursor to The Wall Street Journal. On January 2, 1886, the number of stocks represented in what is now the Dow Jones Transportation Average dropped from 14 to 12, as the Central Pacific Railroad and Central Railroad of New Jersey were removed. Though comprising the same number of stocks, this index contained only one of the original twelve industrials that would eventually form Dow's most famous index.[31]

### Initial components

Dow calculated his first average purely of industrial stocks on May 26, 1896, creating what is now known as the Dow Jones Industrial Average. None of the original 12 industrials still remain part of the index.[32]

### Early years

When it was first published in the mid-1880s, the index stood at a level of 62.76. It reached a peak of 78.38 during the summer of 1890, but ended up hitting its all-time low of 28.48 in the summer of 1896 during the Panic of 1896. Many of the biggest percentage price moves in the Dow occurred early in its history, as the nascent industrial economy matured. In the 1900s, the Dow halted its momentum as it worked its way through two financial crises: the Panic of 1901 and the Panic of 1907. The Dow remained stuck in a range between 53 and 103 points until late 1914. The negativity surrounding the 1906 San Francisco earthquake did little to improve the economic climate; the index broke 100 for the first time in 1906.[35]

At the start of the 1910s, the Panic of 1910–1911 stifled economic growth. On July 30, 1914, as the average stood at a level of 71.42, a decision was made to close down the New York Stock Exchange, and suspend trading for a span of four and a half months. Some historians believe the exchange was closed because of a concern that markets would plunge as a result of panic over the onset of World War I. An alternative explanation is that the United States Secretary of the Treasury, William Gibbs McAdoo, closed the exchange to conserve the U.S. gold stock in order to launch the Federal Reserve System later that year, with enough gold to keep the United States on par with the gold standard. When the markets reopened on December 12, 1914, the index closed at 74.56, a gain of 4.4%. This is frequently reported as a large drop, due to using a later redefinition. Reports from the time say that the day was positive.[36] Following World War I, the United States experienced another economic downturn, the Post–World War I recession. The Dow's performance remained unchanged from the closing value of the previous decade, adding only 8.26%, from 99.05 points at the beginning of 1910, to a level of 107.23 points at the end of 1919.[37]

In 1928, the components of the Dow were increased to 30 stocks near the economic height of that decade, which was nicknamed the Roaring Twenties. This period downplayed the influence of the Depression of 1920–21 and certain international conflicts such as the Polish–Soviet War, the Irish Civil War, the Turkish War of Independence and the initial phase of the Chinese Civil War. The Wall Street Crash of 1929 and the ensuing Great Depression over the next several years returned the average to its starting point, almost 90% below its peak. By July 8, 1932, following its intra-day low of 40.56, the Dow closed the session at 41.22. The high of 381.17 on September 3, 1929 was not surpassed until 1954, in inflation-adjusted numbers. However, the bottom of the 1929 crash came just 2​12 months later on November 13, 1929, when intra-day it was at the 195.35 level, closing slightly higher at 198.69.[38] For the decade, the Dow ended with a healthy 131.7% gain, from 107.23 points at the beginning of 1920, to a level of 248.48 points at the end of 1929, just before the crash of 1929.[39]

Marked by global instability and the Great Depression, the 1930s contended with several consequential European and Asian outbreaks of war, leading up to catastrophic World War II in 1939. Other conflicts during the decade which affected the stock market included the 1936–1939 Spanish Civil War, the 1935–1936 Second Italo-Abyssinian War, the Soviet-Japanese Border War of 1939, and the Second Sino-Japanese War of 1937. The United States dealt the Recession of 1937–1938, which temporarily brought economic recovery to a halt. The largest one-day percentage gain in the index, 15.34%, happened in the depths of the 1930s bear market on March 15, 1933, when the Dow gained 8.26 points to close at 62.10. However, as a whole throughout the Great Depression, the Dow posted some of its worst performances, for a negative return during most of the 1930s for new and old stock market investors. For the decade, the Dow Jones average was down from 248.48 points at the beginning of 1930, to a stable level of 150.24 points at the end of 1939, a loss of about 40%.[40]

### 1940s

Post-war reconstruction during the 1940s, along with renewed optimism of peace and prosperity, brought about a 39% surge in the Dow from around the 148 level to 206. The strength in the Dow occurred despite the Recession of 1949 and various global conflicts.

### 1950s

During the 1950s, the Korean War and the Cold War did not stop the Dow's climb higher. A 200% increase in the average from a level of 206 to 616 ensued over the course of that decade.

### 1960s

The Dow began to stall during the 1960s but still managed a respectable 30% gain from the 616 level to 800.

### 1970s

The 1970s marked a time of economic uncertainty and troubled relations between the U.S. and certain Middle-Eastern countries. The 1970s energy crisis was a prelude to a disastrous economic climate along with stagflation; the combination between high unemployment and high inflation. However, on November 14, 1972, the average closed at 1,003.16, above the 1,000 mark for the first time, during a brief relief rally in the midst of a lengthy bear market.[35] Between January 1973 and December 1974, the average lost 48% of its value in what became known as the 1973–1974 stock market crash, closing at 577.60 on December 4, 1974. In 1976, the index reached 1,000 several times and it closed the year at 1,004.75. Although the Vietnam War ended in 1975, new tensions arose towards Iran surrounding the Iranian Revolution in 1979. Performance-wise for the 1970s, the index remained virtually flat, rising less than 5% from about the 800 level to 838.

### 1980s

The Dow fell 22.61% on Black Monday (1987) from about the 2,500 level to around 1,750. Two days later, it rose 10.15% above the 2,000 level for a mild recovery attempt.

The 1980s began with the early 1980s recession. In early 1981, the index broke above 1,000 several times, but then retreated. After closing above 2,000 in January 1987,[35] the largest one-day percentage drop occurred on Black Monday, October 19, 1987, when the average fell 22.61%. There were no clear reasons given to explain the crash.

On October 13, 1989, the Friday the 13th mini-crash, which initiated the collapse of the junk bond market, resulted in a loss of almost 7% or the index in a single day.[41]

During the 1980s, the Dow increased 228% from 838 level to 2,753; despite the market crashes, Silver Thursday, an early 1980s recession, the 1980s oil glut, the Japanese asset price bubble, and other political distractions. The index had only two negative years in the 1980s: in 1981 and 1984.

### 1990s

The 1990s brought on rapid advances in technology along with the introduction of the dot-com era. The markets contended with the 1990 oil price shock compounded with the effects of the Early 1990s recession and a brief European situation surrounding Black Wednesday. Certain influential foreign conflicts such as the 1991 Soviet coup d'état attempt which took place as part of the initial stages of the Dissolution of the Soviet Union and the Revolutions of 1989; the First Chechen War and the Second Chechen War, the Gulf War, and the Yugoslav Wars failed to dampen economic enthusiasm surrounding the ongoing Information Age and the "irrational exuberance" (a phrase coined by Alan Greenspan) of the Dot-com bubble. Between late 1992 and early 1993, the Dow staggered through the 3,000 level making only modest gains as the biotechnology sector suffered through the downfall of the Biotech Bubble; as many biotech companies saw their share prices rapidly rise to record levels and then subsequently fall to new all-time lows.

On November 21, 1995, the DJIA closed at 5,023.55, above the 5,000 level for the first time. The Dow broke above the 6,000 level in October 1996, and the 7,000 level in February 1997. The Dow easily made its way through the 8,000 level in July 1997.[35] However, in October 1997, the events surrounding the 1997 Asian financial crisis plunged the Dow into a 554-point loss to a close of 7,161.15; a retrenchment of 7.18% in what became known as the October 27, 1997 mini-crash.

Although there was negativity surrounding the 1998 Russian financial crisis along with the subsequent fallout from the 1998 collapse of Long-Term Capital Management due to bad bets placed on the movement of the Russian ruble, the Dow surpassed the 9,000 level on April 3, 1998.[42]

On March 29, 1999, the average closed at 10,006.78, its first close above 10,000. This prompted a celebration on the trading floor, complete with party hats.[43]

On May 3, 1999, the Dow reached 11,014.70, its first close above the 11,000 mark.[44] Total gains for the decade exceeded 315%; from the 2,753 level to 11,497.

The Dow averaged a 5.3% return compounded annually for the 20th century, a record Warren Buffett called "a wonderful century"; when he calculated that to achieve that return again, the index would need to close at about 2,000,000 by December 2099.[45]

### 2000s

The Dow fell 14.3% after the September 11 attacks. Exchanges were closed from September 12 through September 16, 2001.

The eighth largest one-day point drop in DJIA history, and largest at the time, occurred on September 17, 2001, the first day of trading after the September 11 attacks, when the Dow fell 684.81 points, or 7.1%. However, the Dow had been in a downward trend for virtually all of 2001 prior to September 11, losing well over 1,000 points between January 2 and September 10, and had lost 187.51 points on September 6, followed by another 235.4 point loss on September 7. By the end of that week, the Dow had fallen 1,369.70 points, or 14.3%. However, the Dow began an upward trend shortly after the attacks, and quickly regained all lost ground to close above 10,000 for the year.

In 2002, the DJIA made no substantial gains due to the stock market downturn of 2002 and lingering effects of the dot-com bubble. In 2003, the Dow held steady within the 7,000 to 9,000-point level and recovered to the 10,000 mark by year end.

In October 2006, the DJIA set new intra-day, daily close, weekly, and monthly highs, closing above 12,000 points for the first time on the 19th anniversary of Black Monday of 1987.

On February 27, 2007, the Dow Jones Industrial Average fell 3.3% (415.30 points), its biggest point drop since 2001. By April 25, it had recovered and passed the 13,000 level, closing above that milestone for the first time. On July 19, 2007, the Dow passed the 14,000 level, completing the fastest 1,000-point advance for the index since 1999. One week later, a 450-point intraday loss, due to turbulence in the U.S. subprime lending market,[46] initiated another correction, as the Dow fell below 13,000, about 10% down from its highs. On October 9, 2007, the Dow Jones Industrial Average closed at a record high of 14,164.53. Two days later on October 11, the Dow traded at an intra-day level high of 14,198.10, a mark which was not matched until March 2013.[47]

## Assessment

### Issues with market representation

With the inclusion of only 30 stocks, critics such as Ric Edelman argue that the DJIA is an inaccurate representation of overall market performance compared to more comprehensive indexes such as the S&P 500 Index or the Russell 3000 Index. Additionally, the DJIA is criticized for being a price-weighted index, which gives higher-priced stocks more influence over the average than their lower-priced counterparts, but takes no account of the relative industry size or market capitalization of the components. For example, a $1 increase in a lower-priced stock can be negated by a$1 decrease in a much higher-priced stock, even though the lower-priced stock experienced a larger percentage change. In addition, a $1 move in the smallest component of the DJIA has the same effect as a$1 move in the largest component of the average. For example, during September–October 2008, former component AIG's reverse split-adjusted stock price collapsed from $22.76 on September 8 to$1.35 on October 27; contributing to a roughly 3,000-point drop in the index.[69]

As of November 2019, Boeing and UnitedHealth Group are among the highest priced stocks in the average and therefore have the greatest influence on it. Alternately, Pfizer and Cisco Systems are among the lowest priced stocks in the average and have the least amount of sway in the price movement.[70] Critics of the DJIA and most securities professionals recommend the market-capitalization weighted S&P 500 Index or the Wilshire 5000, the latter of which includes most publicly listed U.S. stocks, as better indicators of the U.S. stock market.

### Correlation among components

A study between the correlation of components of the Dow Jones Industrial Average compared with the movement of the index finds that the correlation is higher when the stocks are declining. The correlation is lowest in a time when the average is flat or rises a modest amount.[71]

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