What is the Dow 30?
The Dow 30, commonly referred to as just the "Dow," or the "Dow Jones Industrial Average," was created by Wall Street Journal editor Charles Dow and got its name from Dow and his business partner Edward Jones. The index was developed as a simple means of tracking U.S. market performance in an age when information flow was often limited. The combined stock price of these 30 large, publicly-traded companies determines the Dow Jones Industrial Average. As some of the top stocks in the marketplace, the belief is that the Dow 30 represent a strong assessment of the market's overall health and tendencies.
The Dow Jones Industrial Average
Understanding the Dow 30
The Dow was launched in 1896 and only comprised 12 companies that were considered important to America's economy then. The mix comprised a diverse fabric from tobacco to GE to coal and iron and leather that were critical to America's economy. The Dow expanded to 30 stocks in 1928, where it remains today, as a spin-off of the Dow Jones Transportation Average (which consisted primarily of railroad issues in the early years). The composition of the index changes regularly, as stocks and the industries it represents fall in and out of favor.
Over time, however, its composition has changed to reflect the country's changing economy. For example, telecom giant AT&T, which was added to the Dow 30 in 1916, was replaced with tech behemoth Apple Inc. (AAPL) in 2005.
The Companies of the Dow 30
|The Dow Jones Industrial Average|
|Company Name||Stock Ticker|
|Johnson & Johnson||JNJ|
|Procter & Gamble||PG|
|Travelers Companies Inc.||TRV|
|Walgreens Boots Alliance||WBA|
- The Dow 30, also known as the Dow Jones Industrial Average (DJIA), consists of 30 stocks that are meant to reflect US market performance. Its composition reflects the dominant sectors that propel America's economy.
- While both have the same aims, the DJIA and S&P 500 are different from each other.
The Dow 30 and S&P 500
Comparisons are often made between the Dow Jones Industrial Average (DJIA) and the S&P 500. While both utilize the same strategy of measuring stock market performance through representative companies, there are significant differences in their methodology. For example, the DJIA is price-weighted while the S&P 500 is market capitalization-weighted. They also use significantly different criteria to include companies in their listings.