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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	SYMBOL	INDUSTRY	DATE ADDED	MARKET
1	3 M	MMM	Conglomerate	06-09-1976	NYSE
2	Alcoa	AA	Aluminum	06-01-1969	NYSE
3	American Express	AXP	Consumer Finance	06-30-1962	NYSE
4	AT&T	t	Telecommunication	11-01-1999	NYSE
5	Bank of America	BAC	Banking	02-19-2008	NYSE
6	BOEING	BA	AEROSPACE		NYSE
7	Caterpillar	CAT	Construction and Mining equipment	02-19-2008	NYSE
8	CHEVRON		Oil and Gas	02-19-2008	NYSE
9	Cisco Systems	CSCO	Computer Networking	06-08-2008	NASDAQ
10	Coca-Cola	KO	Beverage	03-12-1967	NYSE
11	DuPont	DD	Chemical Industry	11-20-1936	NYSE
12	Exxon Mobile	EXM	Oil & gas	10-01-1928	NYSE
13	General Electric	GE	Conglomerate	11-07-1907	NYSE
14	The Home Depot	HD	Home improvement	11-01-1999	NYSE
15	Intel	INT	Semiconductor	11-01-1999	NASDAQ
16	IBM.	IBM	Computer and Technology	06-29-1979	NYSE
17	JP Morgan Chase	JPM	Banking	05-06-1991	NYSE
18	Johnson & Johnson	JNJ	Pharmaceutical	11-01-1999	NYSE
19	Kraft Food	KFT	Food Processing	09-22-2008	NYSE
20	McDonald’s	MCD	Fast Food	10-30-1965	NYSE
21	Merck	MRK	Pharmaceutical	06-29-1979	NYSE
22	Microsoft	MSFT	Software	06-29-1979	NASDAQ
23	Pfizer	PFE	Pharmaceutical	04-08-2004	NYSE
24	Procter & Gamble	PG	Consumer goods	05-26-1932	NYSE
25	Travelers	TRV	Insurance	06-08-2009	NYSE
26	United Technologies Corporation	UTX	Telecommunication	05-08-2004	NYSE
27	Verizon Communications	VZ	Telecommunication	04-08-2004	NYSE
28	Wal-Mart	WMT	Retail	03-17-1997	NYSE
30	Walt Disney	DIS	Broadcasting & Entertainment	05-06-1991	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.

For  additional information please call the office.

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