What Is the Dow Jones Stock Index?

by Alex Cosper

Dow Jones is a financial news service that was started by journalists Charles Dow and Edward Jones in 1882. Dow Jones created its first broad market index in 1884, which led to the Dow Jones Industrial Average (DJIA) or "Dow."

Dow Calculation

The first Dow index was based on the sum of 11 stock prices divided by 11. Now the Dow is calculated by adding up the prices of all 30 stocks and dividing by a divisor that accounts for split history. In 2009 the official divisor was .122834016.


The Dow rallied throughout the 1920s, tripling in value, reaching 381. The market crashed in October 1929, falling under 50 in 1932.


By the mid-1950s, the Dow had returned to its highs of the 1920s. The market boom continued through the first half of the 1960s before peaking near 1,000.


The Dow began a five-year climb in 1982 to record levels above 2,500 followed by the market collapse of 1987.

Dow Records

Throughout the 1990s the Dow consistently hit new record levels, surpassing the 10,000 mark for the first time in late 1998. The Dow suffered two crashes in the following decade, in 2001 and 2008, following a high of over 14,000 in 2007.

Dow Components

Some of the long-term stocks on the Dow have been Exxon-Mobile, IBM, McDonald's, JP Morgan Chase, Boeing, Coca-cola, Johnson & Johnson, Procter & Gamble, Microsoft and Walmart.

About the Author

I've been a radio personality in San Francisco, Sacramento and Milwaukee and a web developer of several sites. My latest site, SacTV.com, is a virtual tour of Sacramento that helps travelers learn about the city quickly with videos. Another site, PlaylistReseach.com is like an encyclopedia of playlists based on themes, genres, eras and other categories. I have a successful track record as an effective content developer.

Photo Credits

  • Image by Flickr.com, courtesy of Michael