What Is Purpose of Dow Jones Industrial Average?
The Dow Jones industrial average is an index that reflects the stock performance of 30 large, industry-leading companies called “blue chips” or components. It is the most commonly watched and oldest major market index in the United States. History Created on May 26, 1896, by Charles Dow, the Dow was originally a composite of 12 companies traded on the New York Stock Exchange and included such firms as American Tobacco, General Electric (which is still a component) and United States Rubber Co. Calculation The Dow is calculated on a daily basis based on the price of each company, which means companies with higher share prices are proportionally more influential. Economic Health The creation of the Dow allows stock investors to gauge the overall performance of the stock market through the performance of the major companies included within the index. Present Today’s Dow includes such industry titans as Home Depot, Proctor and Gamble, and Microsoft. Shortcomings The Dow only considers compa
