By Webteam - 26th May 2019 6:01am
Dow Jones Industrial Average is born
The DJIA, or simply the Dow is a stock market index that indicates the value of 30 large, publicly owned companies based in the United States, and how they have traded in the stock market during various periods of time.
These 30 companies are also included in the S&P 500 Index. The value of the Dow is not a weighted arithmetic mean and does not represent its component companies' market capitalization, but rather the sum of the price of one share of stock for each component company. The sum is corrected by a factor which changes whenever one of the component stocks has a stock split or stock dividend, so as to generate a consistent value for the index
It was created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow and one of his business associates, statistician Edward Jones. The industrial average was first calculated on May 26, 1896.
The Industrial portion of the name is largely historical, as many of the modern 30 components have little or nothing to do with traditional heavy industry. Since the divisor is currently less than one, the value of the index is larger than the sum of the component prices. Although the Dow is compiled to gauge the performance of the industrial sector within the American economy, the index's performance continues to be influenced by not only corporate and economic reports, but also by domestic and foreign political events such as war and terrorism, as well as by natural disasters that could potentially lead to economic harm.
The first value of the index in 1896 was 62.76 — at the time of writing it stands at 25,585.69..
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