Dow Jones Industrial Average history

The first stock market index devised and widely used in the United States. It was created by Charles H. Dow (1851–1902), cofounder of Dow Jones & Co. and editor of the Wall Street Journal. Dow began his career in journalism as a reporter for the Springfield (Mass.) Daily Republican. Eventually he moved to New York to work for the Kiernan News Agency, and in 1882 he and Edward Jones founded Dow Jones & Co. They specialized in financial news, originally distributed to Wall Street by messengers until the Wall Street Journal was founded in 1889. Dow remained active at the newspaper until 1902, when he sold the company to Clarence BARRON.

Dow’s index was first devised in 1896 in order to act as an accurate gauge of the market and became regularly reported in the Wall Street Journal. The Dow Jones Industrial Average, first published in the newspaper on May 26, 1896, originally contained 12 industrial stocks—Lachlede Gas & Light, GENERAL ELECTRIC, American Cotton Oil, American Sugar, Chicago Gas, AMERICAN TOBACCO, Distilling & Cattle Feeding, National Lead, North American Co., Tennessee Iron & Coal, U.S. Leather Preferred, and U.S. Rubber. Later in the same year, a railroad average was also introduced, which became the Dow Jones Transportation Average when it was renamed in 1970. In 1929, the utilities average was also introduced to monitor the performance of the energy sector.

The original index was increased gradually over the years to its present 30 stocks. New stocks are added and old stocks dropped from the averages in an attempt to keep the indexes closely attuned to developments in the sectors they represent. Other Dow indexes were introduced over the years, but the original index remains as the best-known and most widely reported of the Dow Jones statistics.

Further reading

• Prestbo, John, ed. The Market’s Measure: An Illustrated History of America Told Through the Dow Jones Industrial Average. New York: Dow Jones & Co., 1999.