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The Dow Jones Industrial Average 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 pfd. and U.S. Rubber. At the time, these companies represented each sector of the market and thus the Dow Jones illustrated the overall performance of the market in the United States.

At the end of a recession created by the collapse of Philadelphia and Reading Railroads in 1893, these companies represented the stronghold of the United States. Even with the trouble from the railroads, coal remained the dominant fuel for transportation, while gas and electric were growing in demand. Crops were a major export and source of revenue for the economy, while also providing sustenance.

As the country's industrial age came to a close, electricity became the dominant energy source that led to numerous technological advancements. The economy shifted toward providing more consumer goods. With these changes, all but General Electric ceased to exist. In 1929, the Dow Jones was expanded to include the 30-company list known as of August 2014. The 30 companies have changed over the years, but the index still represents a wide section of the U.S. market. However, with so few companies listed in the index, it can only truly reflect about a quarter of the overall market. Even with this small list, the DJIA is still able to accurately reflect trends across the broad market.

RELATED FAQS
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    The Dow Jones Industrial Average (DJIA) is a price-weighted index that measures the daily price movements of 30 large American ... Read Answer >>
  2. When can you trade the stocks in the Dow Jones Industrial Average (DJIA)?

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  3. Where can I find all of the stocks in the Dow Jones Industrial Average?

    The Historical Components List is the best place to learn about all 30 stocks in the Dow Jones Industrial Average. Read Answer >>
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