Dow Jones Industrial Average

Investors raced to get their money out of the stock market.

Charles H. Dow (1851-1902) introduced the Dow Jones Industrial Average (DJIA) in 1896 when the market was not considered a respectable venture because of unscrupulous dealers, massive speculation, and the lack of information.

As you might have guessed, calculating the DJIA today isn't as simple as adding up the stocks and dividing by 30. Dow lived in times when stock splits (To learn more, see What is a stock split? Why do stocks split?) and stock dividends weren't commonplace, so he didn't foresee how these corporate actions would affect the average. For example, if a company trading at $100 implemented a 2-for-1 split, the number of its shares doubles, and the price of each share becomes $50. This change in price brings down the average even though there is no fundamental change in the stock. To absorb the effects of price changes from splits, those calculating the DJIA developed the Dow divisor, a number adjusted to account for events like splits that is used as the divisor in the calculation of the average. How Does the Dow Divisor Work? To calculate the DJIA, the current prices of the 30 stocks that make up the index are added and then divided by the Dow divisor, which is constantly modified. To demonstrate how this use of the divisor works, we will create a mock index, the Investopedia Mock Average (IMA). The IMA is composed of 10 stocks, which total $1,000 when their stock prices are added together. The IMA quoted in the media is therefore 100.00 ($1,000/10). Note that the divisor in our example is 10. Now, let's say that one of the stock in the IMA average trades at $100 but undergoes a 2-for-1 split. Its price then reduces to $50. If our divisor remained unchanged, the calculation for the average would give us 95.00 ($950/10). This would not be accurate because the stock split merely change the price, not the value of the company. To compensate for the effects of the split we have to adjust the divisor downward to 9.5. This way, the index remains at 100.00 ($950/9.5) and more accurately reflects the value of the stock in the average. If you are interested in finding the current Dow divisor, you can find it at the website of the Dow Jones Indexes and the Chicago Board of Trade. And How Does the DJIA Number Translate into a Dollar Value? To figure out how a change in any particular stock affects the amount the index changes, up or down, divide the stock's price change by the current divisor. For example, if General Electric was up $5, divide 5 by 0.14418073, which equals 34.68. Thus, if the DJIA was up 100 points on the day, GE was responsible for 34.68 points of the move. Conclusion The DJIA's methodology of calculating an index is known as the price-weighted method. On top of having to deal with stock splits, the downside to this method is that it does not reflect the fact that a one dollar change for a $10 stock is much more significant (percentage wise) than a one dollar change for a $100 stock. Because of price-weighting's associated problems, most all other major indexes such as the S&P 500 are market-capitalization weighted That being said, despite all the shortcomings, the Dow is still one of the most watched indicators of stock market performance. by Investopedia Staff, (Contact Author | Biography)

Neither of these. The plural of Jones is Joneses: "The Joneses live here" or "The Jones family lives here".

28-Mar-99

1995

The Dow Jones Industrial Average (DJIA) refers to the market index. Many traders decide the performance of the market with the help of this index. The Dow Jones and Company also publishes the Wall Street Journal. The editors of the finance journal are also in charge of maintaining the stock index as well as other Dow Jones indices.

Hope this helps.

No, it is closed for Columbus Day. Wrong. The NYSE and Nasdaq are both open for trading on Columbus Day, Oct 13 2008. You can find info on their websites concerning all holiday closures.

Fuel oil costs which are a major expense of generating electric; and the lack of new construction in Florida markets contribute heavily to the analysis. Little new construction stiffles the immediate growth of power use.

The Hong Kong Stock Exchange opens at 9:15 HKT. This time is 9:15pm of the previous day in Eastern Standard Time.

7,949

The Dow Jones Industrial index is opening on Wall Street at 9.30 EST which is equivalent to 14.30 BST or 13.30 GMT

If they do have stocks in the Dow Jones, they will lose invested money.

2.5

Dow Jones is an average of the prices of the below 30 companies...

3M

Alcoa

American Express

AT&T T

Bank of America

Boeing

Caterpillar

Chevron Corporation

Citigroup

Coca-Cola

DuPont

ExxonMobil

General Electric

General Motors

Hewlett-Packard

Home Depot

Intel

IBM

Johnson & Johnson

JPMorgan Chase

Kraft Foods

McDonald's

Merck

Microsoft

Pfizer

Procter & Gamble

United Technologies Corporation

Verizon Communications

Walmart

Walt Disney

Not to be picky but the Nikkei isn't a stock market. It's an index for the Tokyo Stock Exchange which opens in the morning from 9:00 to 11:00 am and the afternoon from 12:30 to 3:00 pm. This means the first session opens at 4PM PST and closes at 6pm PST.

It's not the DOW that opens and closes it's the NYSE.

The British equivalent of the Dow Jones Industrial Average, the FTSE 100 (pronounced "footsie") is an index of the top 100 most highly capitalized companies traded on the London Stock Exchange.

30 Stocks that are considered representative of the market as a whole.

100

They might trust the S&P because it watches more stocks. While Dow only reports on 30 stocks the S&P will track 500 stocks.

1987 On Black Monday the Dow Jones Plunged down the drain a whopping 508 points and then the economy starts to go down with it.