What is Dow Jones?

Dow Jones or Dow or DIJA represents a stock index of 30 blue-chip industrial and financial companies in the United States. The Dow Jones index is price-weighted and does not account for changes in market capitalization. Dow Jones & Co. was founded in 1882 by Charles Dow, Edward Jones, and Charles Bergstresser.

What is Dow Jones today?

In the real-time chart below, let us see how much is the dow jones right now and Dow Jones change today:

Dow Jones industrial average index real-time
If you have a passion for investing in stocks and shares, then it is pretty apparent that you would have come across DOW JONES. When we talk about this stock index, we should have a reasonably good idea about DJIA. It tracks the movement of the most famous, large, and publicly owned companies that are from the blue-chip category. The shares and stocks that are part of DJIA are traded quite extensively on the NASDAQ and NYSE.

It would be pertinent to mention here that Dow Jones has been christened in commemoration of C. Dow. He gave birth to this index way back in 1896 with Edward Jones, his business partner.

Why is it called Dow Jones? Dow Jones index got its name based on two founders Charles Dow and Edward Jones (Dow + Jones).

There are a few things unique about DJIA. It stands second as far as the age of stock indexes is concerned. The first one being DJTA. The main objective of DJIA was to be a barometer of the economy of this country from a broader perspective. If you are looking for a benchmark index for the USA’s best stocks, there are reasons to believe that it is the best. It is an index based on price weightage, and as mentioned earlier, it tracks the best and widely traded shares.

There is no doubt that this an overall index in the USA and across the world. All the firms that make up the DJIA can easily be classified as top-notch companies. They boast of stable earnings, consistently and continuously. Some big names that are part of DJIA are Microsoft Corporation and many other such big words.
The DJIA has traveled quite a distance since it began its journey. When it started, DJIA had only two companies. Most of these 12 companies were from various sectors covering sugar, gas, cotton, railroads, tobacco, sugar, etc. It also would be interesting to mention here that in the early part of the last century, the economy was almost totally dependent on major industrial companies’ growth, as discussed above. Even today, a strong Dow is seen as a reflection of a strong U.S economy. However, the index composition changed with time. There are many instances where a company has been taken off from the DJIA list and replaced with a new, purely based on merit and performance. Suppose a company ends up losing a significant portion of its market capitalization because of various reasons. In that case, it gets replaced by a new company that has the credentials and money to replace the outgoing company.

Dow Jones Chart 10 Years

Below is presented Dow Jones 10 years chart:

Dow Jones U.S. Small-Cap Total Stock Market Index

Below is presented last 10 years’ chart of the Dow Jones small-cap index. Dow Jones adjusted for inflation index showed interesting return. Dow Jones average annual return last 10 years was 10.43% for small caps (annualized for inflation).

Dow Jones historical chart – Dow Jones 100 year chart

Below is presented closing price of the Dow Jones industrial average for the last 100 years:

Dow jones historical prices by year – Dow Jones industrial average historical annual data

This Dow Jones graph above presents historical closing prices for the Dow index from 1915 till 2021. The first increase in price Dow had in 1980. Dow Jones 1980 till 2000. increased up to $10000.   If we analyze the Dow Jones industrial average’s closing price, we can see the rapid gain in the last 10 years. Dow Jones’s 100-year chart showed that in 2007 Dow’s industrial average price was $12050 while in 2009 went down to $6547. So in just two years, Dow’s price has halved. After that, from $6547 in just 12 years, the Dow price has risen above $3000.

Dow returns by year – Dow Jones historical prices by year from 1915

Year	Dow Year Open	Dow Year High	Dow Jones Year Low	Dow Year Close	Annual	% Change
1915	74.45	54.63	99.21	54.22	99.15	0.8149
1916	95.27	98.81	110.15	86.42	95	-0.0419
1917	87.87	96.15	99.18	65.95	74.38	-0.2171
1918	80.97	76.68	89.07	73.38	82.2	0.1051
1919	99.79	82.6	119.62	79.35	107.23	0.3045
1920	90.01	107.23	108.85	66.75	71.95	-0.329
1921	73.39	72.67	81.5	63.9	80.8	0.123
1922	93.24	78.91	102.76	78.59	98.17	0.215
1923	94.87	98.77	105.38	85.91	95.52	-0.027
1924	99.65	95.65	120.51	88.33	120.51	0.2616
1925	134.4	121.25	159.39	115	151.08	0.2537
1926	153	151.08	166.14	135.2	157.2	0.0405
1927	176.07	155.16	200.93	152.73	200.7	0.2767
1928	226.17	203.35	300	191.33	300	0.4948
1929	313.54	307.01	381.17	198.69	248.48	-0.1717
1930	236.04	244.2	294.07	157.51	164.58	-0.3377
1931	138.6	169.84	194.36	73.79	77.9	-0.5267
1932	64.53	74.62	88.78	41.22	59.93	-0.2307
1933	84.5	59.29	108.67	50.16	99.9	0.6669
1934	98.16	100.36	110.74	85.51	104.04	0.0414
1935	120.35	104.51	148.44	96.71	144.13	0.3853
1936	162.07	144.13	184.9	143.11	179.9	0.2482
1937	166.45	178.52	194.4	113.64	120.85	-0.3282
1938	132.36	120.57	158.41	98.95	154.76	0.2806
1939	142.57	153.64	155.92	121.44	150.24	-0.0292
1940	134.64	151.43	152.8	111.84	131.13	-0.1272
1941	121.93	130.57	133.59	106.34	110.96	-0.1538
1942	107.15	112.77	119.71	92.92	119.4	0.0761
1943	134.92	119.93	145.82	119.26	135.89	0.1381
1944	143.32	135.92	152.53	134.22	152.32	0.1209
1945	169.66	152.58	195.82	151.35	192.91	0.2665
1946	191.52	191.66	212.5	163.12	177.2	-0.0814
1947	177.48	176.39	186.85	163.21	181.16	0.0223
1948	179.78	181.04	193.16	165.39	177.3	-0.0213
1949	179.67	175.03	200.52	161.6	200.13	0.1288
1950	216.28	198.89	235.47	196.81	235.41	0.1763
1951	257.41	239.92	276.37	238.99	269.23	0.1437
1952	270.35	269.86	292	256.35	291.9	0.0842
1953	275.84	292.14	293.79	255.49	280.9	-0.0377
1954	334.34	282.89	404.39	279.87	404.39	0.4396
1955	442.69	408.89	488.4	388.2	488.4	0.2077
1956	493.21	485.78	521.05	462.35	499.47	0.0227
1957	476.07	496.03	520.77	419.79	435.69	-0.1277
1958	491.26	439.27	583.65	436.89	583.65	0.3396
1959	632.57	587.59	679.36	574.46	679.36	0.164
1960	618.02	679.06	685.47	566.05	615.89	-0.0934
1961	691.74	610.25	734.91	610.25	731.14	0.1871
1962	639.14	724.71	726.01	535.76	652.1	-0.1081
1963	714.69	646.79	767.21	646.79	762.95	0.17
1964	834.09	766.08	891.71	766.08	874.13	0.1457
1965	910.7	869.78	969.26	840.59	969.26	0.1088
1966	872.78	968.54	995.15	744.32	785.69	-0.1894
1967	879.48	786.41	943.08	786.41	905.11	0.152
1968	903.96	906.84	985.21	825.13	943.75	0.0427
1969	875.72	947.73	968.85	769.93	800.36	-0.1519
1970	753.12	809.2	842	631.16	838.92	0.0482
1971	884.87	830.57	950.82	797.97	890.2	0.0611
1972	950.08	889.3	1036.27	889.15	1020.02	0.1458
1973	924.07	1031.68	1051.7	788.31	850.86	-0.1658
1974	759.13	855.32	891.66	577.6	616.24	-0.2757
1975	802.89	632.04	881.81	632.04	852.41	0.3832
1976	975.2	858.71	1014.79	858.71	1004.65	0.1786
1977	894.37	999.75	999.75	800.85	831.17	-0.1727
1978	821.13	817.74	907.74	742.12	805.01	-0.0315
1979	844.38	811.42	897.61	796.67	838.74	0.0419
1980	891.14	824.57	1000.17	759.13	963.99	0.1493
1981	932.95	972.78	1024.05	824.01	875	-0.0923
1982	884.53	882.52	1070.55	776.92	1046.54	0.196
1983	1190.78	1027.04	1287.2	1027.04	1258.64	0.2027
1984	1178.59	1252.74	1286.64	1086.57	1211.57	-0.0374
1985	1327.99	1198.87	1553.1	1184.96	1546.67	0.2766
1986	1793.1	1537.73	1955.57	1502.29	1895.95	0.2258
1987	2277.53	1927.31	2722.42	1738.74	1938.83	0.0226
1988	2061.48	2015.25	2183.5	1879.14	2168.57	0.1185
1989	2510.33	2144.64	2791.41	2144.64	2753.2	0.2696
1990	2679.45	2810.15	2999.75	2365.1	2633.66	-0.0434
1991	2929.04	2610.64	3168.83	2470.3	3168.83	0.2032
1992	3284.08	3172.4	3413.2	3136.6	3301.11	0.0417
1993	3524.92	3309.2	3794.33	3242	3754.09	0.1372
1994	3794.22	3756.6	3978.36	3593.35	3834.44	0.0214
1995	4494.28	3838.48	5216.47	3832.08	5117.12	0.3345
1996	5739.63	5177.45	6560.91	5032.94	6448.27	0.2601
1997	7447.01	6442.49	8259.3	6391.7	7908.3	0.2264
1998	8630.76	7965	9374.27	7539.07	9181.43	0.161
1999	10481.56	9184.27	11497.12	9120.67	11497.12	0.2522
2000	10729.38	11357.51	11722.98	9796.03	10787.99	-0.0617
2001	10199.29	10646.15	11337.92	8235.81	10021.57	-0.071
2002	9214.85	10073.4	10635.25	7286.27	8341.63	-0.1676
2003	9006.64	8607.52	10453.92	7524.06	10453.92	0.2532
2004	10315.51	10409.85	10854.54	9749.99	10783.01	0.0315
2005	10546.66	10729.43	10940.55	10012.36	10717.5	-0.0061
2006	11409.78	10847.41	12510.57	10667.39	12463.15	0.1629
2007	13178.26	12474.52	14164.53	12050.41	13264.82	0.0643
2008	11244.06	13043.96	13058.2	7552.29	8776.39	-0.3384
2009	8885.65	9034.69	10548.51	6547.05	10428.05	0.1882
2010	10668.58	10583.96	11585.38	9686.48	11577.51	0.1102
2011	11957.57	11670.75	12810.54	10655.3	12217.56	0.0553
2012	12966.44	12397.38	13610.15	12101.46	13104.14	0.0726
2013	15009.52	13412.55	16576.66	13328.85	16576.66	0.265
2014	16777.69	16441.35	18053.71	15372.8	17823.07	0.0752
2015	17587.03	17832.99	18312.39	15666.44	17425.03	-0.0223
2016	17927.11	17148.94	19974.62	15660.18	19762.6	0.1342
2017	21750.2	19881.76	24837.51	19732.4	24719.22	0.2508
2018	25046.86	24824.01	26828.39	21792.2	23327.46	-0.0563
2019	26379.55	23346.24	28645.26	22686.22	28538.44	0.2234
2020	26890.67	28868.8	30606.48	18591.93	30606.48	0.0725
2021	31576.43	30223.89	33171.37	29982.62	33153.21	0.0832

What is the average return for the Dow Jones?

Below is the calculated average return for the Dow index from 2011-2021, 2001-2021, and 1991-2021.

What is Dow Jones’s average return for the last 10 years?

• The total Dow Jones Industrial Average Return for the last 10 years adjusted for inflation is 122.010%.
• Annualized Dow Jones Industrial Average Return for the last 10 years adjusted for inflation is 8.302%.
• Total DJIA Return (Dividends Reinvested) for the last 10 years adjusted for inflation is 180.419%.
• Annualized DJIA Return (Dividends Reinvested) for the last 10 years adjusted for inflation is 10.862%

What is Dow Jones’s average return last 20 years?

• The total Dow Jones Industrial Average Return for the last 20 years adjusted for inflation is 109.782%.
• Annualized Dow Jones Industrial Average Return for the last 20 years adjusted for inflation is 3.774%.
• Total DJIA Return (Dividends Reinvested) for the last 20 years adjusted for inflation is 238.185%.
• Annualized DJIA Return (Dividends Reinvested) for the last 20 years adjusted for inflation is 6.282%

What is Dow Jones’s average return last 30 years?

• The total Dow Jones Industrial Average Return for the last 30 years adjusted for inflation is 454.899%.
• Annualized Dow Jones Industrial Average Return for the last 30 years adjusted for inflation is 5.878%.
• Total DJIA Return (Dividends Reinvested) for the last 30 years adjusted for inflation is 1027.519%.
• Annualized DJIA Return (Dividends Reinvested) for the last 30 years adjusted for inflation is 8.410%

 

Dow Jones historical data in Excel

Please download Dow Jones history 10 years data
Please download Dow Jones 100 years historical data

Dow Jones market capitalization

Market capitalization or market cap is the total market value of the company’s outstanding shares. To calculate a company’s market capitalization, you need to multiply the current stock price by the total number of shares. Dow Jones market capitalization in 2020 was around 8.94 trillion dollars.

Stocks having better value are the ones that carry greater weight as far as the overall index is concerned. Earlier, the average was calculated by dividing the price of 12 stocks after summing up the stock prices on a particular day. This has gone through many changes over time, and it may have happened because of many reasons. Stock splits, mergers and acquisitions may have led to these changes over time.

Dow Jones components

Dow Jones components represent 30 stocks that are price-weighted. The Dow 30 or DIJA index is calculated using a divisor to normalize the index components.

Dow Jones components are the following 30 companies:

Company	Symbol	Industry	Date added	Index weighting
UnitedHealth Group	UNH	Managed health care	9/24/2012	7.12%
Goldman Sachs	GS	Financial services	9/20/2013	6.97%
The Home Depot	HD	Retailing	11/1/1999	5.42%
Boeing	BA	Aerospace and defense	3/12/1987	5.00%
Microsoft	MSFT	Information technology	11/1/1999	4.73%
Amgen	AMGN	Pharmaceutical industry	8/31/2020	4.68%
Visa Inc.	V	Financial services	9/20/2013	4.55%
Caterpillar Inc.	CAT	Construction and Mining	5/6/1991	4.50%
Honeywell	HON	Conglomerate	8/31/2020	4.34%
McDonald's	MCD	Food industry	10/30/1985	4.34%
Salesforce	CRM	Information technology	8/31/2020	4.32%
The Walt Disney Company	DIS	Broadcasting and entertainment	5/6/1991	3.97%
3M Company	MMM	Conglomerate	8/9/1976	3.76%
Johnson & Johnson	JNJ	Pharmaceutical industry	3/17/1997	3.24%
JPMorgan Chase	JPM	Financial services	5/6/1991	3.16%
The Travelers Companies	TRV	Financial services	6/8/2009	3.16%
American Express	AXP	Financial services	8/30/1982	2.99%
Nike	NKE	Apparel	9/20/2013	2.80%
Walmart	WMT	Retailing	3/17/1997	2.69%
IBM	IBM	Information technology	6/29/1979	2.60%
Procter & Gamble	PG	Fast-moving consumer goods	5/26/1932	2.59%
Apple Inc.	AAPL	Information technology	3/19/2015	2.44%
Chevron Corporation	CVX	Petroleum industry	2/19/2008	2.27%
Merck & Co.	MRK	Pharmaceutical industry	6/29/1979	1.52%
Dow Inc.	DOW	Chemical industry	4/2/2019	1.31%
Intel	INTC	Information technology	11/1/1999	1.27%
Verizon	VZ	Telecommunication	4/8/2004	1.16%
The Coca-Cola Company	KO	Food industry	3/12/1987	1.05%
Walgreens Boots Alliance	WBA	Retailing	6/26/2018	1.03%
Cisco Systems	CSCO	Information technology	6/8/2009	0.98%

The index has to be often re-valued to accommodate new entrants and, after taking into account, firms or companies that may have been forced to move out for various reasons. The number of companies moved to 30 way back in 1928. However, what is pertinent to mention here is that the Dow Index composition has changed around 60 times since 1928. The first change happened about three months after the component index of 30 was created. The Great Depression saw many changes to its overall components. One of the most significant changes perhaps happened in 1932, when eight out of thirty stocks in the DOW had to be replaced.

There have been many changes to the composition of the Dow over the past 125 years or so. One of the most significant changes happened in 1997 when Bethlehem Steel, Texaco, Woolworths, and Westinghouse Electric were replaced by Johnson & Johnson, Hewlett-Packard, Travelers Group Wal-Mart, respectively.

In 1999 some more changes happened when Union Carbide, Chevron, Sears Roebuck, and Goodyear Tire were shown the door, and in their places, Intel, Home Depot, SBC Communications, and Microsoft were added. Many other changes to the composition of the 30 happened in 2018 and 2020. Therefore, such changes are part and parcel of the journey of DJIA, and most certainly, many more changes to the composition will happen over the years.

What are 30 stocks in the Dow Jones?

Dow Jones companies list is:

• 3M Company
• American Express
• Amgen
• Apple Inc.
• Boeing
• Caterpillar Inc.
• Chevron Corporation
• Cisco Systems
• Dow Inc.
• Goldman Sachs
• Honeywell
• IBM
• Intel
• Johnson & Johnson
• JPMorgan Chase
• McDonald’s
• Merck & Co.
• Microsoft
• Nike
• Procter & Gamble
• Salesforce
• The Coca-Cola Company
• The Home Depot
• The Travelers Companies
• The Walt Disney Company
• UnitedHealth Group
• Verizon
• Visa Inc.
• Walgreens Boots Alliance
• Walmart

 

How is the Dow Jones calculated?

Dow Jones index value represents the sum of all 30 stocks’ prices divided by a Dow divisor. Dow Jones index calculation is based on price-averaged calculation and determining Dow divisor. The Dow divisor is a figure used to normalize the value of the Dow Jones Industrial Average, and it is regularly updated to ensure that structural changes to the market.

Over a while, a new concept known as Dow Divisor was used as a constant for calculating the DJIA index. The constant was predetermined and helped determine the impact of a single point move as far as the 30 stocks are concerned. However, there are situations and times where the divisor had to be changed to ensure that the overall value of the DOW remained consistent. The divisor, of course, keeps change, and you find it out by referring to various sources of information. The WSJ or the Wall Street Journal gives the interested stakeholders the latest divisor.

Not many people may be aware that the DOW index is not calculated using the WAA or the Weighted Arithmetic Average. Therefore it may not be an accurate reflection of the overall market capitalization of the various components of DJIA. However, this is not the case with other indexes like S&P 500 and others. The Dow Index is the total share of stocks’ price movement as far as all the components are concerned after being divided by the divisor number mentioned above. In a practical situation, if there is a single point movement in any single stocks that make up the 30 total numbers, this will move the index by the same number of points.

Is Amazon in Dow Jones?

No, Amazon company is not in the Dow Jones index. Amazon needs to split its shares by 10-to-1 or more to reduce them to a level at which Dow Jones can consider this company. Dow index can not accept share that is more than $3000 such as Amazon. Amazon didn’t split its stock since 1999. This is the biggest problem for the Dow Jones index because some big and excellent companies are not listed. In 2020, the Dow rose just 7.3%, while the Nasdaq gained 24%, and the S&P 16%.

What’s the difference between the Dow Jones and the NASDAQ?
Dow Jones Industrial Average consists of 30 major companies traded on the NYSE, while the NASDAQ index has more than 3000 companies. Dow index is based on average price calculation where the stock split is not considered. In contrast, NASDAQ is based on the average Market capitalization (Price * Outstanding shares) of the companies index. The NASDAQ stock market depends largely on the technology sector’s performance, while Dow’s performance is focused on the 30 major companies as a group and not as individual stocks.

Conclusion

To conclude, some critics strongly believe that a stocks’ price may not be the right way to reflect a company’s overall performance that belongs to the list of the 30. Market cap is perhaps a more accurate way of looking at the strength and possible weaknesses of companies.