What Is the Dow Jones 65 Composite Average?
The Dow Jones 65 Composite Average is an index comprised of 65 large public companies in the industrial, transportation, and utility sectors. The index is made up of the 30 stocks that form the Dow Jones Industrial Average (DJIA), 20 stocks that make up the Dow Jones Transportation Average (DJTA), and 15 stocks of the Dow Jones Utility Average (DJUA). The Dow Jones 65 Composite, like the three sub-indexes, is price-weighted.
While the Dow 65 is more comprehensive than the DJIA alone, it still excludes many important technology or growth companies that will not appear in either of the other two sub-indices.
- The Dow Jones 65 Composite Average is an equity index including sixty-five of the most influential publicly traded companies in America.
- In particular, the index is comprised of all of the stocks in the Dow Jones Industrial, Transportation, and Utilities indexes.
- As with its sub-indices, the Dow 65 is a price-weighted index.
Understanding Dow Jones 65 Composite Average
The combination of the Dow Jones Industrial, Transportation, and Utility averages used to be a broad measure of the U.S. economy, as those sectors were once the lion's share of economic production. This is no longer the case, as industries such as technology, healthcare, and finance now include some of the largest companies in the world. While the DJIA has, in recent years, included some more modern companies in its "industrial" average (such as Microsoft, Apple, and Intel), a majority of the Dow Jones 65 stocks are focused on traditional or old-line businesses, and therefore do not appear to represent a broad measure of economic performance.
All of the Dow Jones averages are price-weighted indexes. For this type of index, stocks with higher prices will influence the direction of the average more than lower prices, regardless of the actual size of the company. In a price-weighted index, a stock that increases from $110 to $120 will have a greater effect on the index than a stock that increases from $10 to $20, even though the percentage move is greater than that of the higher-priced stock. Higher-priced stocks exert a greater influence on the index's, or the basket's, overall direction. To calculate the value of a simple price-weighted index, find the sum of the share prices of the individual companies and divide by the number of companies. In some averages, this divisor is adjusted in order to maintain continuity in the event of stock splits or changes to the list of companies included in the index. Most broad market indexes, by contrast, are weighted by market capitalization, such as the Nasdaq 100 Index and S&P 500 Index.
Representative Sample of the Dow Jones 65 Composite Average
Many of the 65 companies are household names. The following are some of the companies in each of the three sectors:
- Industrial sector: Boeing, Caterpillar, Exxon Mobil, Johnson & Johnson (J&J), United Technologies, Walt Disney
- Transportation sector: American Airlines, Delta Airlines, Landstar System, Norfolk Southern, Southwest Airlines, United Parcel Service (UPS)
- Utility sector: America Electric Power, American Water Works, Centerpoint Energy, Dominion Resources, Edison International, NextEra Energy