Dow Jones: What It Is and Why It's Important in Stock Investing

Dow Jones, or more precisely, Dow Jones & Company, is one of the world's largest business and financial news companies. Charles Dow, Edward Jones, and Charles Bergstresser formed the company in the 19th century. Besides the famous Dow Jones Industrial Average, the company also created various other market averages.

Key Takeaways

  • Dow Jones & Company is one of the largest business and financial news companies in the world.
  • Dow Jones & Company was founded in 1882 by Charles Dow, Edward Jones, and Charles Bergstresser.
  • Dow Jones started the Dow Jones Industrial Average (DJIA), as well as many other indexes.
  • The DJIA tracks publicly-owned corporations and is one of the most-watched stock indexes in the world.
  • Dow Jones sold the DJIA and its other indexes to S&P Dow Jones Indices LLC, a joint venture between S&P Global and the CME Group.

Who Is Dow Jones?

Dow Jones was not a single person, but two of the three people who founded Dow Jones & Company in 1882. Charles Dow was the Dow in Dow Jones, Edward Jones was the Jones, and Charles Bergstresser was the company's third founder. In 1889, they went on to found The Wall Street Journal, which remains one of the world's most influential financial publications.

Dow was known for his ability to explain complicated financial news to the public. He believed that investors needed a simple benchmark to indicate whether the stock market was rising or declining. Dow chose several industrial-based stocks for the first index, and the first reported average was 40.94.

Charles Dow also believed it was possible to predict stock market movements based on the price movements of different types of stocks. According to Dow Theory, an upward trend in industrial stocks should be confirmed by a similar move up in transportation stocks. Charles Dow created various market averages to more accurately define which way " industrial stocks" or " transportation stocks" were headed.

What Is Dow Jones?

Dow Jones & Company is the firm founded by Charles Dow, Edward Jones, and Charles Bergstresser in 1882, not the people themselves. Charles Dow and Edward Jones ran the company themselves in the early years and built a reputation for integrity. When Dow died in 1902, Clarence Barron and Jessie Waldron bought the company, and control eventually passed to the Bancroft family. In 2007, News Corp. purchased Dow Jones & Company from the Bancrofts.

As of 2022, Dow Jones & Company continued to be a major source of financial news. Its publications included MarketWatch, Barron's, and, of course, The Wall Street Journal. What is more, these financial news outlets maintained considerable independence from News Corp.

On the other hand, Dow Jones & Company no longer directly controls the Dow Jones Averages that it originally created. The Dow Jones Averages are owned by S&P Dow Jones Indices LLC, a joint venture between S&P Global and the CME Group.

The Dow Jones Industrial Average (DJIA)

It is easy to confuse Dow Jones with the Dow Jones Industrial Average (DJIA). Often referred to as "the Dow," the DJIA is one of the most-watched stock indexes in the world, containing companies such as Apple, Boeing, Microsoft, and Coca-Cola.

The DJIA initially launched with just 12 companies based mostly in the industrial sectors. However, it later grew to include 30 firms. The original companies operated in railroads, cotton, gas, sugar, tobacco, and oil. Industrial companies' performance is often seen as synonymous with that of the overall economy, making the DJIA a key measure of broader economic health. Although the economy's health is now tied to many other sectors, the DJIA is still seen as a vital indicator of the U.S. economy's well-being.

Although the Dow Jones Industrial Average rarely changes, there are occasional additions and deletions. These changes often come in batches and always keep total membership at 30 companies.

Dow Jones & Company owned the DJIA as well as many other indexes that represent different sectors of the economy. They included the oldest index, the Dow Jones Transportation Average, which tracks 20 transportation companies, such as airlines and delivery services. Another major index is the Dow Jones Utility Average, which tracks 15 U.S. utility stocks.

In 2012, S&P Dow Jones Indices LLC bought the Dow Jones Indexes. S&P Dow Jones Indices LLC is a joint venture between controlling member S&P Global and the CME Group.

In the world of finance, you'll often hear people ask, "How did New York do today?" or "How did the market perform today?" In both cases, these people are likely referring to the DJIA, as it is the most widely-used index. It is more popular than both the S&P 500 Index, which tracks 500 stocks, and the Nasdaq Composite Index, which includes more than 2,500 U.S. and international equities.

What Exactly Is the Dow Jones?

The Dow Jones Industrial Average groups together the prices of 30 of the most traded stocks on the New York Stock Exchange (NYSE) and the Nasdaq. It is an index that helps investors determine the overall direction of stock prices.

Why Is It Called Dow Jones?

The Dow Jones Industrial Average is called the Dow Jones because it was developed by Charles Dow and Edward Jones at Dow Jones & Company.

What Is the Meaning of Dow in the Stock Market?

The Dow Jones Industrial Average, or the Dow for short, is one way of measuring the stock market's overall direction. It includes the prices of 30 of the most actively traded stocks. When the Dow goes up, it is considered bullish, and most stocks usually do well. When the Dow falls, it is bearish, and most stocks typically lose money.

What Companies Are in the Dow Jones?

The table below alphabetically lists the companies included in the DJIA as of June 2022.

Dow Jones Industrial Average Components
Company Symbol Year Added
American Express Co AXP 1982
Amgen AMGN 2020
Apple Inc AAPL 2015
Boeing Co BA 1987
Caterpillar Inc CAT 1991
Cisco Systems CSCO 2009
Chevron Corp CVX 2008
Goldman Sachs Group GS 2013
Home Depot Inc HD 1999
Honeywell International Inc HON 2020
International Business Machines Corp IBM 1979
Intel Corp INTC 1999
Johnson & Johnson JNJ 1997
Coca-Cola Co KO 1987
JP Morgan Chase & Co JPM 1991
McDonald's Corp MCD 1985
3M Co MMM 1976
Merck & Co Inc MRK 1979
Microsoft Corp MSFT 1999
Nike Inc NKE 2013
Procter & Gamble Co PG 1932
Travelers Companies Inc TRV 2009
UnitedHealth Group Inc UNH 2012
Salesforce Inc CRM 2020
Verizon Communications Inc VZ 2004
Visa Inc V 2013
Walgreens Boots Alliance Inc WBA 2018
Walmart WMT 1997
Walt Disney Co DIS 1991
Dow Inc DOW 2019
30 DJIA companies as of June 2022

Can You Buy Shares in the Dow Jones Industrial Average?

You can buy shares in the Dow through exchange traded funds (ETFs). However, you cannot invest directly in the Dow Jones Industrial Average because it is just an index.

Article Sources
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  1. Library of Congress. "Dow Jones Industrial Average First Published."

  2. S&P Dow Jones Indices. "The McGraw-Hill Companies, CME Group Announce the Launch of S&P Dow Jones Indices."

  3. The Wall Street Journal. "The Beginning: 1882-1899."

  4. The Wall Street Journal. "125 Years of Dow Jones."

  5. The Wall Street Journal. "Murdoch Wins His Bid for Dow Jones."

  6. Dow Jones. "Our Products."

  7. U.S. Securities and Exchange Commission. "Dow Jones & Company and News Corporation Enter into Definitive Merger Agreement."

  8. S&P Dow Jones Indices. "Exchange Relationship, CME Group."

  9. S&P Dow Jones Indices. "Dow Jones Transportation Average."

  10. S&P Dow Jones Indices. "Dow Jones Utility Average."

  11. S&P Dow Jones Indices. "S&P 500."

  12. Nasdaq. "Nasdaq Composite."

  13. CNBC. "Dow 30 Chart."

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