Dow Jones & Co. produces numerous stock indexes, including the Dow Jones Utility Average, the Europe Dow and the Asia Dow. The Dow Jones Industrial Average, or simply "the Dow," is the most widely recognized. Dating from 1896, it is the index featured prominently in financial newspapers and on financial websites. The components of the Dow include the best-known American companies over a broad range of industries.
The Dow includes 30 companies in a wide range of sectors of U.S stocks. As of November 2011, the largest sector is industrial stocks, making up over 21 percent of the Dow. Businesses with between 10 and 20 percent representation include technology, consumer services, oil and gas and consumer goods. The remaining components each make up less than 10 percent of the Dow. They include finance, healthcare, telecommunications and basic materials. The industrial index intentionally excludes utilities and transportation because Dow Jones has separate indexes for them.
2011 Component Companies
As of December 2011, the Dow Jones Industrial Average includes the following 30 components: 3M Co., Alcoa Inc., American Express Co., AT&T Inc., Bank of America Corp., Boeing Co., Caterpillar Inc., Chevron Corp., Cisco Systems Inc., Coca-Cola Co., E.I. Du Pont de Nemours and Co., Exxon Mobil Corp., General Electric Co., Hewlett Packard Co., Home Depot Inc., Intel Corp., International Business Machines Co., Johnson & Johnson, J.P. Morgan Chase and Co., Kraft Foods. Inc., McDonalds Corp., Merck & Co. Inc., Mircrosoft Corp., Pfizer Inc., Procter & Gamble Co., Travelers Companies Inc., United Technologies Corp., Verizon Communications Inc., Wal-Mart Stores Inc. and Walt Disney Co.
Selection and Review
Only the stocks of U.S. companies are listed on the Dow. The managing editor of the Wall Street Journal and the heads of research for Dow Jones and for the company's majority owner form the selection committee. They choose stocks for their superior reputation and strong growth history. They also try to maintain representation of the various sectors within the index. The actual composition of the Dow remains mostly stable. It normally changes only when companies merge or make other major alterations in their business. The committee reviews the list as needed, rather than on any particular schedule.
In the beginning, the Dow index was computed by simple averaging. The company added up all the stock prices in dollars and divided the total by the number of components. The calculation now changes the divisor from 30 to prevent skewing the results because of stock splitting and similar events. The index is also weighted for price. The Dow updates every two seconds during stock trading hours in the United States.
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