Dow Jones industrial Average

Basics

Dow Jones Industrial average (DJIA) or mainly called as Dow is an index of stock market in US. Dow Jones index is consisted of 30 stocks.

Table of Contents

DJIA is the oldest and most followed index of the world. As it consists of only 30 shares, many analysists consider it inadequate and not a representative of the economy. Many new age stocks have not been included in the Dow Jones Industrial average Index Like Meta, alphabet, Tesla, Netflix, Zoom etc.

The Dow Jones Industrial Average (DJIA), also known as the Dow Jones or simply the Dow, is a stock market index that measures the stock performance of 30 large publicly traded companies listed on the New York Stock Exchange (NYSE) and the NASDAQ. The Dow is one of the oldest and most widely followed stock market indices in the world, and it is considered to be a barometer of the overall U.S. stock market.

The DJIA was created by Charles Dow, co-founder of Dow Jones & Company, in 1896, and it originally consisted of just 12 companies. Today, the Dow is made up of 30 of the largest and most influential companies in the U.S., including household names such as Apple, Microsoft, and ExxonMobil. The index is calculated based on the prices of the stocks of these companies, and it is updated in real-time throughout the trading day.

One way to analyze the performance of the Dow is by looking at its “zones,” which are ranges of the index’s value. For example, a Dow in the “green zone” would be trading above its 50-day moving average and could be seen as a positive sign for the stock market. On the other hand, a Dow in the “red zone” would be trading below its 50-day moving average and could be seen as a negative sign.

While the Dow is a widely followed stock market index, it is important to note that it is just one of many indicators of the overall market’s health. Investors and analysts also look at other stock market indices, such as the S&P 500 and the NASDAQ, as well as economic indicators, such as GDP and employment data, to get a more comprehensive view of the market.

Basis of Calculation of DJIA

Further, its main drawback is that it is being calculated on the basis of Price of the stock and not on the basis of Market capitalization or Floating stock Basis.

Who discovered the Dow Jones Index

It was firstly calculated by Charles Dow in 1896, the editor of wall streel journal at that Time which was also a found of Dow Jones company. So, index was named on Charles Dow.

30 Stocks in Dow Jones and weightage thereof

At present following companies are constituent of the DJIA (Stocks in DJIA) as on 07/10/2022. As the Dow Jones is Price based index, hence its weights are also changed day to day. If a stock split is done by the company, then its weight in the index will reduce accordingly

Components of the Dow Jones
SR No	Company	Symbol	Weight	Price
1	UnitedHealth Group Incorporated	UNH	11.4324	504.00
2	Goldman Sachs Group Inc.	GS	6.70954	300.50
3	Home Depot Inc.	HD	6.39506	284.31
4	Microsoft Corporation	MSFT	5.43488	233.89
5	McDonald’s Corporation	MCD	5.16974	233.19
6	Amgen Inc.	AMGN	5.08583	229.03
7	Visa Inc. Class A	V	4.08712	183.27
8	Caterpillar Inc.	CAT	3.93781	177.50
9	Honeywell International Inc.	HON	3.85478	171.08
10	Johnson & Johnson	JNJ	3.56563	160.20
11	Chevron Corporation	CVX	3.55484	160.10
12	Travelers Companies Inc.	TRV	3.50573	156.88
13	Salesforce Inc.	CRM	3.42359	150.18
14	Apple Inc.	AAPL	3.2027	139.96
15	American Express Company	AXP	3.13554	138.95
16	Boeing Company	BA	2.91135	129.74
17	Walmart Inc.	WMT	2.8999	128.55
18	Procter & Gamble Company	PG	2.78538	124.25
19	International Business Machines Corporation	IBM	2.69179	118.77
20	3M Company	MMM	2.44712	107.64
21	JPMorgan Chase & Co.	JPM	2.38149	105.87
22	Walt Disney Company	DIS	2.20311	96.82
23	NIKE Inc. Class B	NKE	1.98575	87.16
24	Merck & Co. Inc.	MRK	1.92563	87.59
25	Coca-Cola Company	KO	1.21189	54.45
26	Dow Inc.	DOW	1.00246	44.41
27	Cisco Systems Inc.	CSCO	0.91437	40.36
28	Verizon Communications Inc.	VZ	0.83332	36.85
29	Walgreens Boots Alliance Inc.	WBA	0.71022	30.65
30	Intel Corporation	INTC	0.59857	25.73

Year wise return of Last 10 Years

Dow Jones industrial average index has given a Handsome return on Investment in Last 10 years. Year wise return is shown below in the table. In year 2015 and 2018 it has given minus return but in all other year dow jones has given 7.25 to 26.5 % return. In current year 2022 its returns are also negative 20.95% up to 30.09.2022

Year	Closing Value	Net Change	% Change
2012	13,104	887	7.26
2013	16,577	3,473	26.5
2014	17,823	1,246	7.52
2015	17,425	−398	−2.23
2016	19,763	2,338	13.42
2017	24,719	4,957	25.08
2018	23,327	−1,391	−5.63
2019	28,538	5,211	22.34
2020	30,606	2,068	7.25
2021	36,338	5,732	18.73
30.09.22	28,725	-7,613	-20.95

Accepted even after shortcomings

Now, new Index S&P Dow jones 500 and S&P Indexes are popular. For, New Age stock Nasdaq is being followed religiously. But even after so many shortcomings Dow Jones Industrial index is most followed index and derivatives based on DJIA (futures) are also one of the most traded futures of the world of any indices.

Many Exchange traded funds based on Dow jones are framed by many mutual fund houses. Investors are also invested in such ETFs . Dow Jones index is treated as the economy indicator of US economy.

Know all about Nasdaq 100 Index