The Dow Jones Industrial Average, or DJIA, is a stock index consisting of the average price of thirty of largest company stocks that are traded on the major stock exchanges in the United States, NASDAQ and the NYSE. The DJIA was founded in 1896 by Charles Dow as a twelve stock index to show investors whether the overall market was up or down. The Dow gained popularity as a market indicator when the Wall Street Journal began publishing the stock index daily in October 1896.

Today, the DJIA is a benchmark stock index watched by investors in countries all over the world and serves as a key barometer of the overall health of the stock market. Investors everywhere measure their portfolio against the Dow’s performance.

Stocks Included in the Dow

The Dow currently consists of 30 stocks. Many are household names, and all are leaders in their respective industries. The 30 stocks currently in the DJIA are:

• 3M Company
• Alcoa Incorporated
• American Express
• AT&T
• Bank of America
• Boeing
  
• Caterpillar
  
• Chevron
  
• Cisco
  
• Coca-Cola
  
• DuPont
  
• Exxon Mobil
  
• General Electric Company
• Hewlett-Packard
  
• Home Depot
  
• Intel
  
• IBM
  
• Johnson and Johnson
  
• JPMorgan Chase
  
• Kraft Foods
  
• McDonald’s
  
• Merck
  
• Microsoft
  
• Pfizer
  
• Proctor and Gamble
  
• Travelers Companies
  
• United Technologies
  
• Verizon Communications
  
• Wal-Mart
  
• Walt Disney Company

The list of stocks in the DJIA is reviewed annually by the Averages Committee. The stock index is modified as necessary, due to mergers, bankruptcies or other significant changes to the businesses included in the Dow.

Calculating the Dow

The stock index was originally calculated by totaling the prices of all of the stocks in the DJIA and then dividing that sum by the total number of stocks in the Dow. The same basic calculation is done today, but the divisor is no longer the total number of stocks in the DJIA.

The divisor has been adjusted over the years to reflect changes to the stock index since its founding. Stocks have been added to the Dow, and some companies have split their stock one or more times. Other companies have gone out of business and been removed from the DJIA.

The divisor is recalculated after any change is made to the stock index. The divisor for the Dow is published daily by the Wall Street Journal.