First publication of the Dow Jones Industrial Average occurs on May 26, 1896.
In May 1896, financial journalist Charles Dow unveiled an innovative tool that would revolutionize the investment world—the Dow Jones Industrial Average (DJIA). The index, initially comprising 12 American companies, was launched in a basement at 15 Wall Street, right beside the New York Stock Exchange.
A high school dropout from rural Connecticut, Dow had the extraordinary ability to simplify complex investment topics, such as stocks and bonds, for the average reader. Along with Edward Jones and Charles Bergstresser, he co-founded Dow Jones & Company Inc. The trio had previously worked together at the Kiernan News Agency in New York. Bergstresser chose to be a silent partner, allowing Dow and Jones to focus on the company's development.
The first product Dow Jones released was a series of brief news bulletins that were handwritten and handed out to traders at the Stock Exchange throughout the day. Initially called "flimsies," these briefings provided critical early information about transactions in stocks and bonds. In 1883, the company compiled these bulletins into a monthly news sheet, named the Customers' Afternoon Letter, priced at $15. Six years later, the Customers' Afternoon Letter was renamed to The Wall Street Journal.
Dissatisfied by the lack of reliable information on stock market transactions, Dow decided to create an index to provide a basic understanding of market trends. He selected 11 companies that regularly appeared in the Customers' Afternoon Letter and calculated an average of their stock prices to create a barometer for the transportation sector. This index allowed investors to assess a company's performance against the sector as a whole, making informed decisions based on facts rather than intuition or guesswork.
On May 26, 1896, the Dow Jones Industrial Average was born, with 12 companies representing the breadth of the American economy. These included American Cotton Oil, American Sugar Refining, American Tobacco, Chicago Gas, the Distilling & Cattle Feeding Company, General Electric, Laclede Gas, National Lead, the North American Utility Company, Tennessee Coal & Iron, US Leather, and US Rubber. Dow calculated the initial index before finally publishing it—40.94 points, equating to an average share price of $40.94.
Over the years, the Dow Jones Industrial Average has evolved, reaching milestones such as closing above 100 in the 1960s and surpassing 1,000 in the 1970s. Today, the index is in the low 40,000s and includes 30 stocks, with none of Dow's original choices remaining. Notable inclusions throughout history have been General Electric (added in 1907 and dropped in 2018), Procter & Gamble (since 1932), Nvidia (added last November), and Sherwin-Williams (also added last November).
Unlike indices such as the Nasdaq Composite or the Standard and Poor's 500, the Dow Jones Industrial Average measures share value rather than market capitalization. Despite being a snapshot of the American economy, the index has become one of the most recognized and accessible brands in business, capturing the attention of investors and the general public alike.
During an interview with Billy Connolly in 1985, the Scottish comedian joked, "I don't know who the man is, but in my books, there's no recession. I am loaded, and the Dow Jones Index? I don't know who the man is." The man that Connolly referred to was Charles Henry Dow, who had an idea that would shape the financial world for generations to come.
The Dow Jones Industrial Average, first introduced by Charles Dow in 1896, was an innovative tool that revolutionized the investment world, providing a basic understanding of market trends for investors. This index, initially composed of 12 American companies, spanned various sectors such as transportation, business, and finance, including General Electric, Procter & Gamble, and Nvidia. Over the years, the Dow Jones has evolved, serving as a measure of share value in the American economy and becoming one of the most recognized and accessible brands in business.
