The DJIA was created in 1896 by Charles Dow and Edward Jones. It is the second oldest stock index in the United States after the Dow Jones Transportation Average, which was first priced in 1885. Even though the Dow Jones Industrial Average is one of the most commonly traced indices worldwide, its weighting is sometimes criticized by financial market professionals. The index value is calculated by summing up the prices of all 30 stocks and dividing the sum by so called the Dow Divisor, which adjusts the index value to historical events such as splits or mergers. This calculation doesn’t take market capitalization into consideration and it favors companies with a higher stock price.
The index has experienced some historic ups and downs since its inception. The worst year the Dow has had was 1931. The index lost half its value, after already having lost a third of its value the previous year. This was during the height of the Great Depression. Two years later, a bull market buoyed the index by 64 percent, one of the best years and a harbinger for the recovery. In the 21th century, the 2008 financial crisis had the biggest toll on the index value.
The DJIA index is composed of the following thirty companies:
Johnson & Johnson
Procter & Gamble
Travelers Companies Inc
Walgreens Boots Alliance