The Evolution and Impact of the Dow Jones Indexes

The Origins of Dow Jones & Company

In the late 19th century, the trio of Dow, Jones, and Bergstresser established Dow Jones & Company, a firm that would become synonymous with financial news. They began by distributing daily news bulletins to subscribers in the Wall Street area, laying the groundwork for what would become a financial reporting empire.

The Birth of the Dow Jones Stock Indexes

The Dow Jones Transportation Average (DJT)

In 1884, Charles H. Dow introduced the first Dow Jones stock index, which initially consisted of nine railroad companies, reflecting the importance of the rail industry to the U.S. economy at the time. This index, which later became known as the Dow Jones Transportation Average (DJT), has evolved over the years. It now includes major transportation players such as airlines and delivery services, with companies like Delta Air Lines and FedEx being part of the modern mix. The DJT is often seen as a barometer for the health of the economy, as it measures the performance of companies responsible for moving goods and people across the nation.

The Dow Jones Industrial Average (DJI)

On May 26, 1896, the Dow Jones Industrial Average (DJI) was unveiled, initially comprising 11 stocks, predominantly from the railroad sector. The DJI began to be published daily in The Wall Street Journal on October 7, 1896, and by 1928, it expanded to include 30 stocks, a number that has remained constant to this day. The DJI is arguably the most recognized stock index globally and is often the go-to indicator for the general state of the U.S. stock market and economy. As of the end of 1999, the 30 stocks within the DJI represented approximately 28 percent of the market capitalization of all U.S. stocks.

The Dow Jones Utilities Average (DJU)

The youngest of the three, the Dow Jones Utilities Average (DJU), was introduced in January 1929. It initially started with 18 stocks, focusing on the utility sector, which includes companies in the electric, gas, and water industries. The number of stocks in the DJU has fluctuated over time, settling at 15 since June 2, 1938.

The Selection and Maintenance of the Dow Indexes

The DJI, DJT, and DJU indexes are meticulously selected, maintained, and reviewed by the editors of The Wall Street Journal. To be considered for inclusion, a company must be a leading player and actively traded on the U.S. Stock Market. The Dow Jones averages are price-weighted, meaning that they are influenced solely by changes in the stock prices, unlike other indexes that also consider changes in the number of shares outstanding.

The Significance of the Dow Jones Indexes

The Dow Jones Indexes serve as a historical snapshot of the American economy's evolution. They have adapted to include industries that define each era, from railroads in the 19th century to technology and services in the 21st century. The DJI, in particular, is a focal point for analysts and investors, providing a clear and concise picture of market trends and economic health.

For more detailed information on the Dow Jones Indexes and their current standings, you can visit authoritative sources such as The Wall Street Journal and MarketWatch.

In conclusion, the Dow Jones Indexes are not just numbers on a screen; they are a reflection of the American economy's past, present, and future. They continue to be a vital tool for investors and a testament to the enduring legacy of Dow, Jones & Company.