The Dow Jones Industrial Average is a method of gauging the financial health of the stock market by measuring the prices of 30 chosen companies, as of 2014. It was originally created by Charles Dow in 1896 as an average stock price of 12 major companies, but the current average is weighted in order to try to provide an accurate representation of the market wealth when compared to historical figures.Continue Reading
There are a number of different market-average algorithms, but few have been as long-lived or as successful as the Dow Jones in measuring market health. The S&P 500 is another market-average ticker, measuring the market capitalization of 500 companies on the stock exchange. Both averages include stocks on the New York Stock Exchange, as well as NASDAQ.
At the time of its founding, the Dow Jones included 12 companies that were considered among the strongest of the late 19th century. Over time, as companies have folded or been absorbed by others, the makeup of the Dow Jones has changed many times. The companies in the index have changed 53 times, and the company that has spent the longest time on the index is General Electric. GE was added to the Dow Jones in 1896. As of 2014, GE has been a part of the average continuously since 1907.Learn more about Investing