Dow Jones Industrial Average (DJIA)
The DJIA is an index used to measure the U.S. financial markets' performance. Introduced on May 26, 1896, by Charles H. Dow, the DJIA is the oldest stock price measure in continuous use. Over the past century, it has become the most widely recognized stock market indication in the U.S., and probably in the world. The 30 stocks included in today's DJIA are listed on the NYSE, except for Microsoft and Intel, and are all large blue-chip companies that reflect the health of the U.S. economy. All but a handful of these have major business operations throughout the rest of the world, thus providing some insight into the global economy's economic well-being. The DJIA has been repeatedly updated over the decades to reflect changes in corporate America. From the original 12 stocks used in 1896, it was increased to 20 stocks in 1916 and then to 30 stocks in 1928. The most recent modification occurred on November 1, 1999, when Home Depot, Intel, Microsoft, and SBC replaced Chevron, Goodyear, Sears, and Union Carbide, respectively. Intel and Microsoft, which both trade on the Nasdaq stock market, are the first Dow-30 components that are not listed on the NYSE since the DJIA was created in 1896. Though it is only the unweighted average of 30 stock prices, over the long run, the DJIA's tracking of market movements has closely paralleled more broadly based capitalization-weighted indices like the NYSE, the Standard & Poor's 500, and the Wilshire 5000. In 1896, the DJIA was computed as the sum of the prices of 12 stocks divided by the number of stocks. Since then, the divisor has been adjusted to compensate for stock splits and other distributions that would create distortions in the average and that would not reflect a change in the stocks' value. The adjusted divisor's value as of November 1, 1999, was 0.20435952. Its current value is printed in the Wall Street Journal every day.