Dow Jones

What is the Dow anyhow? You hear about the Dow every time you watch the news. You might even hear your parents talking about it. But what is it?

The Dow is a list of thirty stocks chose by Dow Jones & Company (the people who publish The Wall Street Journal). The list includes the strongest companies in the widest number of American Industries that represent a segment of US economy. These may not be the biggest companies but they are the most representative. Sometimes you'll hear the Dow and the market used interchangeably.

Can you guess the 30 Dow Jones Companies?
  • Walt Disney Co.
  • Wal-Mart Stores Inc.
  • United Technologies Corp.
  • Tricon Global Restaurants
  • SBC Communications Inc.
  • Sketchers USA Inc.
  • Procter & Gamble Co.
  • Phillip Morris Cos.
  • Pepsi Co.
  • Merck & Co. Inc.
  • Microsoft Corp.
  • Minnesota Mining and Manufacturing Co.
  • McDonald's Corp.
  • Johnson & Johnson
  • J. P. Morgan Chase & Co.
  • International Paper Co.
  • International Business Machines Corp.
  • Intel Corp.
  • Honeywell International Inc.
  • Home Depot Inc.
  • Hewlett-Packard Co.
  • General Motors Corp.
  • General Mills
  • General Electric Co.
  • Ford Motor Co.
  • Exxon Mobil Corp
  • Frito Lay
  • Eastman Kodak Co.
  • EI. DuPont de Nemours & Co.
  • Coca-Cola Co.
  • Citigroup Inc.
  • Caterpiller Inc.
  • Boeing Co.
  • AT&T Corp.
  • American Express Co.
  • AOLTime Warner
  • Alcoa Inc.
And sometimes you'll hear the Dow referred to as a number. What is that number?

Well, it's a measure of the market computed by averaging the share prices of those thirty industries. The Dow is short for The Dow Jones Industrial Average (DJIA). You would think that to find the DJIA, you would just take the share prices of those 30 companies, add them up and divide by 30. That's exactly what you do-except the "divide by 30" part! Instead you divide by the current divisor-which complicates things just a little bit.

Sometimes companies split stocks. Suppose you have one $10 stock from McDonalds's Corp. McDonald's decides to split the stock and give you 3 for 1. That is for every one share of stock you previously owned, you now own three. Instead of owning 1 share of $10, you own 3 shares each worth $3.33.

Stock splitting distorts the market. To make up for this Dow Jones comes up with another divisor.