The history of the Dow Jones Industrial Average, or DJIA, goes back to May 26, 1896. Charles Dow, Wall Street Journal editor and founder of Dow Jones and Company, first compiled and published the average as an indicator of stock market performance.
When first published, the original components, or member companies, of the Dow Jones Industrial Average included "smokestack" companies across a range of industries. Of the original twelve companies that made up the Industrials back in 1896, only General Electric is still part of the Index. The other eleven companies included:
The original components of the Dow Jones Industrials have changed over the years, and the index no longer represents companies that are in strictly agricultural and "heavy industries" such as tobacco, sugar, iron, leather, and rubber. As the U.S. economy has grown to rely on non-industrial sectors, greater emphasis has been placed on companies providing financial services, retailing, and technology.
The first Dow Jones Index to be introduced was the Industrial Average, which was initially published on May 26, 1896. Leveraging the popularity and success of the industrials, Charles Dow later introduced the Dow Jones Transportation Average on October 26, 1896, and the Dow Jones Utility Average on January 2, 1929.
Today, the Dow Jones Industrial Average consists of 30 companies that are thought to best mirror the U.S. economy. Representative companies of the Industrials include 3M, Caterpillar, The Home Depot, JPMorgan Chase, Microsoft, McDonalds and NIKE. The Dow is normally quoted as an index. This means the stock price of each company is multiplied by a weighting factor to derive the composite index number.
By using an index, and introducing a weighting into the formula, companies can be inserted into the average without disrupting the historical movement of the index. A complete listing of the industrial companies and their weightings can be found here: Dow Jones Industrials.
The Dow Jones Transportation Index consists of 20 companies that provide transportation services including rail, trucking, airlines, and automobiles. Representative companies in the Index include CSX Corp., FedEx Corporation, Overseas Shipholding Group, Southwest Airlines, and Ryder System, Inc. Just like the Industrials, each component or company in the Transportation index has a weighting. A complete list of the index can be downloaded here: Dow Jones Transportations.
The last of the Dow indexes to be introduced, the Dow Jones Utility Average, consists of 15 companies providing electricity and natural gas to consumers across the United States. Representative companies in the Index include Consolidated Edison, Exelon, Southern Company, and Williams Cos. A complete list of the index can be downloaded here: Dow Jones Utilities.
Perhaps one of the most interesting aspects of the Dow's history is the time it took to reach 1,000 point milestones. When the index was first introduced, it stood at 40.94, and it took roughly 76 years to reach the 1,000 mark. As of this writing, the Dow has not hit the 22,000 mark.
The complete milestone history of the average appears in the table below:
|1,000||November 14, 1972||76 Years|
|2,000||January 8, 1987||14 Years, 2 Months|
|3,000||April 17, 1991||4 Years, 3 Months|
|4,000||February 23, 1995||3 Years, 10 Months|
|5,000||November 21, 1995||9 Months|
|6,000||October 14, 1996||11 Months|
|7,000||February 13, 1997||4 Months|
|8,000||July 16, 1997||5 Months|
|9,000||April 6, 1998||9 Months|
|10,000||March 29, 1999||12 Months|
|11,000||May 3, 1999||1 Month|
|12,000||October 19, 2006||7 Years, 5 Months|
|13,000||April 25, 2007||6 Months|
|14,000||July 17, 2007||3 Months|
|15,000||May 7, 2013||5 Years, 10 Months|
|16,000||November 18, 2013||6 Months|
|17,000||July 3, 2014||8 Months|
|18,000||December 23, 2014||5 Months|
|19,000||November 22, 2016||1 Year, 11 Months|
|20,000||January 25, 2017||2 Months|
|21,000||March 1, 2017||1 Month|
Moving the DJIA from the 11,000 to 12,000 mark seemed impossible until October 19, 2006, when the Dow broke through a 1,000 point milestone for the first time in the 21st century. This milestone represented a 1,000 point move in the index, but was only a 9.1% increase in the average. Seven years was a long time to reach this milestone, especially when compared to the 14 years it took to move from 1,000 to 2,000, which was a 50% increase in the average over that timeframe. Our article on the Dow at 12,000 contains additional information on this important and historical achievement.
About the Author - History of the Dow