Index History

Dow Jones Industrial Average

The Dow Jones Industrial Average is one of several highly watched stock market indices created by Wall Street Journal editor and Dow Jones & Company founder Charles Dow. Dow compiled the index as a way to gauge the performance of the industrial component of America’s stock markets. It is currently the oldest continuing U.S. market index. The Dow Jones Industrial Average is also called DJI, DJIA, Dow 30, Dow Jones Index or just Dow.

Today, the average consists of 30 of the largest and most widely held public companies in the United States. The “industrial” portion of the name is largely historical as many of the 30 modern components have little to do with heavy industry. To compensate for the effects of stock splits and other adjustments, it is currently a scaled average, not the actual average of the prices of its component stocks. The actual average of prices is multiplied by a scale factor, which changes over time, to generate the value of the index.


First published on May 26, 1896, the DJIA represented the average of twelve stocks from various important American industries. The companies were:

1. American Cotton Oil Company (Predecessor of Best Foods and now part of Unilever)

2. American Sugar Company (Now Amstar Holdings)

3. American Tobacco Company (Was broken up in 1911)

4. Chicago Gas Company (is now Peoples Energy Corporation)

5. Distilling & Cattle Feeding Company (is now Millennium Chemicals)

6. General Electric (still in operation, removed from the Dow Jones Industrial Average in 2018)

7. Laclede Gas Light Company (still in operation as The Laclede Group)

8. National Lead Company (is now NL Industries)

9. North American Company (Edison Electric company, broken up in the 1950s)

10. Tennessee Coal, Iron and Railroad Company (was bought by U.S. Steel in 1907)

11. U.S. Leather Company (was dissolved in 1952)

12.United States Rubber Company (was Uniroyal and bought by Michelin in 1990)

When the DJIA was first published, the index stood at 40.94 and was computed as a direct average. The average was calculated by first adding up stock prices of its components and dividing by the number of stocks. Many of the biggest Dow percentage gains occurred early on as the industrial economy matured.

  • The DJIA hit its all-time low of 28.48 during the summer of 1896.
  • The Dow’s largest one-day percentage drop ever occurred on December 12, 1914, falling 24.39%, after a multi-month NYSE hiatus brought on by World War I.

In 1916, the number of stocks in the DJIA was increased to twenty. Then in 1928 the index was finally increased to thirty stocks near the height of the “roaring 1920s” bull market. The stock crash of 1929 and ensuing Great Depression returned the index to its starting point, almost 90% below its peak, during July of 1932. The September 3, 1929 high would not be surpassed until 1954.

  • The largest one-day percentage gain in the DJIA was 14.87% and happened on October 6, 1931, during the 1930s bear market.
  • The post-World War II bull market, which brought the market well above its 1920s highs, lasted until 1966.
  • On November 14, 1972 the DJIA closed above 1,000 (1,003.16) for the first time, in the midst of a lengthy bear market.

In the 1980s and more so in the 1990s there was very rapid increase in the index and severe corrections did occur along the way.

  • October 19, 1987 “Black Monday”, the Dow falls 22.6% and is the largest one-day percentage drop since 1914.
  • October 21, 1987 – Has the largest one-day percentage gain since 1932, rising 10.15%, bringing the Dow back above 2,000.
  • November 21, 1995 – The DJIA closes above 5,000 (5,023.55) for the first time.
  • March 29, 1999 – The Dow closes at 10,006.78, its first close above the 10,000.
  • May 3, 1999 – The Dow closes at 11,014.70, its first close above 11,000.

The year 2000 arrives, the party is over, and a bear market asserts itself and even now some debate whether it is over.

  • January 14, 2000 – The DJIA reaches a record high of 11,750.28 intraday and closes at 11,722.98 which holds true until October 3, 2006.
  • March 16, 2000 – The Dow advances 499.19 points, or +4.93%, for its largest one-day point gain.
  • September 17, 2001 – The Dow has its largest one-day point drop and is the first day of trading after September 11, 2001 attacks, falling 684.81 points, or -7.1%.
  • September 21, 2001 – By the end of the week following the 9/11 attacks the Dow had fallen 1,369.70 points, or -14.3%.
  • December 31, 2001 – A recovery attempt allows the DJIA to close the year at 10,021.57.
  • October 9, 2002 – The Dow has its lowest close since October 1997 at 7,286.27 and had an intraday low the following day of 7,181.47.
  • End of 2003 – The Dow has returned to the 10,000 level.
  • January 9, 2006 the Dow breaks the 11,000 barrier for the first time since June 2001, closing at 11,011.90.
  • October 2006 – Four years after its bear market low, the DJIA closes above 12,000 reaching new intra-day, daily close, weekly, and monthly highs for the first time in almost seven years on the 19th anniversary of “Black Monday”.
  • February 27, 2007 – The Dow Jones Industrial Average falls 415.30 points, closing at 12,216.96, the biggest point drop since September 17, 2001 which was the first day of trading after the September 11, 2001 attacks.

DJIA Negatives

  • DJIA is a price-weighted average, which gives higher-priced stocks more influence over the average than lower-priced components.
  • A $1 increase in a lower-priced stock can be negated by a $1 decrease in a much higher-priced stock, even though the first stock experienced a larger percentage change.
  • Has only 30 stocks in the average but is widely used as an indicator of overall market performance.
  • Not all 30 components open at the same time in the morning so opening price does not accurately show actual market conditions.
  • February 27, 2007 – Beginning at around 2pm EST the DJIA suffered a serious technical failure and began to experience a delay as the system that calculates and distributes the index bogged down under extremely heavy trading volume. Over the next hour, the reported value for the index diverged sharply from its true value. At approximately 3pm, a backup system was brought online to correct the problem, which resulted in a almost-instantaneous drop of 200 points. Although the index’s value was correct after the switch, the apparent rapidity of the drop, coupled with poor communications, resulted in major market confusion. The SEC is now investigating the issue.

DJIA Components

  • The individual components of the DJIA are occasionally changed as market conditions warrant and are selected by the editors of The Wall Street Journal. When companies are replaced, the scale factor used to calculate the index is also adjusted so that the value of the average is not directly affected by the change.
  • On November 1, 1999, Chevron, Goodyear Tire and Rubber Company, Sears Roebuck, and Union Carbide were removed from the DJIA and replaced by Intel, Microsoft, Home Depot, and SBC Communications.
  • Intel and Microsoft became the first two companies traded on the NASDAQ exchange to be listed in the DJIA.
  • On April 8, 2004, another change occurred as International Paper, AT&T, and Eastman Kodak were replaced with Pfizer, Verizon, and AIG.
  • On December 1, 2005 AT&T’s original T symbol returned to the DJIA as a result of the SBC Communications and AT&T merger.
  • Go here for all Dow Jones Industrial Average component changes.