The Dow Jones Industrial Average (DJIA) was created in 1896 by Charles Dow and originally consisted of 12 companies: American Cotton Oil, American Sugar, American Tobacco, Chicago Gas, Distilling & Cattle Feeding, General Electric, Laclede Gas, National Lead, North American, Tennessee Coal and Iron, U.S. Leather, and U.S. Rubber.

At the time, these companies were among the titans of American industry. General Electric is the only company that has retained its place on the DJIA under its original name since the index's inception. Others were broken up, taken over, dissolved, or relegated to subsidiary status over the years.

Understanding the DJIA

Charles Dow was an American journalist who founded a financial news bureau, originally called Dow, Jones & Co., with a colleague, Edward Davis Jones.

Key Takeaways

  • Choose the 12 companies that best indicate the direction of the American stock markets.
  • Add up their closing stock prices every day, and divide by 12.
  • That was the Dow Jones Industrial Average in 1896. (Now it's 30 companies.)

Like any observer, Dow saw that many or most stocks tended to move like a wave in the same direction from day to day as investors reacted to events and expectations. He sought to put a number on that daily movement.

Dow chose 12 of the biggest and most influential corporations of the day. Each was a giant in its sector, and most reflected demand for the raw materials that fed the American economy, like coal, sugar, and oil.

At the close of every trading day, he added up all of their stock prices and divided by 12. That was the Dow Jones Industrial Average.

Introduced in The Wall Street Journal on May 26, 1896, the DJIA was the first index of stock market activity.

The timing was auspicious. The United States was emerging from a recession caused by the collapse in 1893 of Philadelphia and Reading Railroads. Even with trouble in the railroad industry, economic activity was booming. Coal remained the dominant fuel for transportation, while gas and electricity were in demand. Crops were a major export, while also providing sustenance to Americans.

Changes to the Dow

As the country's industrial age came to a close, electricity became the dominant energy source and led to numerous technological advancements that were embraced by consumers. The economy shifted toward providing more consumer goods and technology based services and products.

Dow Component Changes on August 24, 2020

On August 24, 2020, Salesforce, Amgen and Honeywell were added to the Dow, replacing Exxon-Mobil, Pfizer and Raytheon Technologies.

Most of the original companies in the DJIA were removed from the list long before they went out of business. Then and now, the list of Dow components is revised periodically to remove companies that can no longer be seen as bellwethers and to substitute companies that have climbed to prominence.

In 1928, the Dow was expanded to include 30 companies. These companies have changed over the years, but the index still aims to represent the U.S. stock markets and the economy in general.

2020 Companies in the Dow

Below is a list of the companies included in the Dow as of August 2020. 

  1. Salesforce
  2. Procter & Gamble
  3. DowDuPont 
  4. Amgen
  5. 3M
  6. IBM
  7. Merck
  8. American Express
  9. McDonald's
  10. Boeing
  11. Coca-Cola
  12. Caterpillar
  13. JPMorgan Chase
  14. Walt Disney
  15. Johnson & Johnson
  16. Walmart
  17. Home Depot
  18. Intel
  19. Microsoft
  20. Honeywell
  21. Verizon
  22. Chevron
  23. Cisco Systems
  24. Travelers Cos.
  25. UnitedHealth Group
  26. Goldman Sachs
  27. Nike
  28. Visa
  29. Apple
  30. Walgreens Boots Alliance