About the Dow Jones Industrial Average
The Dow Jones Industrial Average (DJIA) is one of the most widely followed stock market indexes in the world. It tracks the performance of 30 large, publicly traded companies from various sectors of the U.S. economy, such as technology, finance, health care and consumer goods. The DJIA was created in 1896 by Charles Dow and Edward Jones, two journalists who wanted to provide a simple and reliable measure of the overall health of the stock market.
The DJIA is calculated by adding up the prices of all 30 stocks and dividing by a divisor that adjusts for stock splits, dividends and other changes. The DJIA is a price-weighted index, which means that stocks with higher prices have more influence on the index than stocks with lower prices. The DJIA is not a reflection of the total market value or market capitalization of its components.
The DJIA is often used as a benchmark for investors and analysts to compare the performance of individual stocks, sectors or portfolios. The DJIA also reflects the mood and sentiment of the market, as it reacts to news events, economic data, earnings reports and other factors that affect stock prices. The DJIA is updated every second during trading hours and is published by various media outlets and websites.
The DJIA has undergone several changes over its history, as some companies have been replaced by others that better represent the current state of the U.S. economy. The most recent change occurred in August 2020, when Salesforce.com, Amgen and Honeywell International replaced Exxon Mobil, Pfizer and Raytheon Technologies. The current 30 components of the DJIA are:
- 3M
- American Express
- Amgen
- Apple
- Boeing
- Caterpillar
- Chevron
- Cisco Systems
- Coca-Cola
- Dow
- Goldman Sachs
- Home Depot
- Honeywell International
- IBM
- Intel
- Johnson & Johnson
- JPMorgan Chase
- McDonald's
- Merck
- Microsoft
- Nike
- Procter & Gamble
- Salesforce.com
- Travelers Companies
- UnitedHealth Group
- Verizon Communications
- Visa
- Walgreens Boots Alliance
- Walmart
- Walt Disney
The DJIA is not the only stock market index that investors can use to track the performance of the U.S. stock market. Other popular indexes include the S&P 500, which tracks 500 large-cap companies from various sectors; the Nasdaq Composite, which tracks over 3,000 companies from the technology and innovation sectors; and the Russell 2000, which tracks 2,000 small-cap companies from various sectors.