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WHAT IS THE DOW

The Dow Jones is one of the most followed and recognized equity index in the world. It was first published in 1896. It consists of four different averages.

1 - Industrial
2 - Utilities
3 - Transportation
4 - Composite Average

Of these averages the most widely known is the Dow Jones.  It reflects the price of 30 of the largest American industrial companies traded on the New York Stock Exchange.  The stocks of those companies represent about a fifth of the market value of the stocks traded in the U.S equities market and represent a cross section of some of the largest sectors of the U.S economy.

Here are the thirty Dow Components:
 

Company Name

Symbol

Exchange

Alcoa, Inc	AA	NYSE
American Express Co	AXP	NYSE

AT & T Corp	T	NYSE
Boeing Co	BA	NYSE
Caterpillar, Inc	CAT	NYSE
Citigroup, Inc	C	NYSE
Coca-Cola	KO	NYSE
Disney Walt Co.	DIS	NYSE
Du Pont de Nemours & CO	DD	NYSE
Eastman Kodak Co	EK	NYSE
Exxon Mobil Corp	XOM	NYSE
General Electric Co	GE	NYSE
General Motors Corp	GM	NYSE
Hewlet Packard Co	HP	NYSE
Home Depot	HD	NYSE
Honeywell Int, Inc	HON	NYSE
Intel Corp.	INTC	FINRAAQ
International Business Machine	IBM	NYSE
International Paper Co	IP	NYSE
Johnson & Johnson	JNJ	NYSE
Mc Donald's Corp	MCD	NYSE
Merck & Co	MRK	NYSE
Microsoft Corp	MSFT	FINRAAQ
Minnesota Mining & Manufacturing	MMM	NYSE
Morgan J. P. & co	JPM	NYSE
Philip Morris	MO	NYSE
Procter & Gamble Co	PG	NYSE
SBC Communication, Inc	SBC	NYSE
United Technologies Corp	UTX	NYSE
Wal-Mart Stores, Inc	WMT	NYSE

The Dow Jones is computed by summing the prices of its 30 components stocks and dividing by 30. When a stock dividend and split are declared or when changes in the list of component stocks occur, the average must be adjusted to avoid statistical aberration.

Assume that the prices of the thirty stocks summed to  $3,000.00.  Then the 30 stocks average price would be  $3,000.00 divided by 30 or $100.00.  If the next day the average is summed up to be 109 the Dow is said to have increased by 9 points or $9.00.  Similarly if at the end of the trading day the sum of the prices is at 95 the Dow will be said to have dropped by 5 points or $5.00.

If one of the 30 stock was quoted at $200.00 then split two for one the sum of the prices would become $2,900.00.  The divisor will then become $2900 divided by $100 or $29.

As of February 18, 2003 the divisor was : 0.14279922.

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