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.
- 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. With these changes, all of the original components with the exception of General Electric ceased to exist as independent companies.
The only company that has been included in the Dow Jones Industrial Average continuously since 1896.
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 May 2020. They are listed by length of time on the index, with the newest – Walgreens Boots Alliance – having been added June 26, 2018.
- Procter & Gamble
- United Technologies
- American Express
- JPMorgan Chase
- Walt Disney
- Johnson & Johnson
- Home Depot
- Cisco Systems
- Travelers Cos.
- UnitedHealth Group
- Goldman Sachs
- Walgreens Boots Alliance