The Dow Jones Industrial Index was created by the publisher Charles Dow in 1896. Intended to be a representative sampling of the American economy the Dow Jones Average at first made up only 12 companies. As the economy was still primarily an industrial one at the time these companies tended to specialize in heavy industry. Today the Dow Jones is made up of 30 companies. The component companies in the Dow have changed 48 times.
As the economy has changed the companies that compose the Dow have changed, as new players representing different industries and ways of gaining profit have emerged and become the major drivers of the American economy. Media companies such as Disney joined the list, for instance, and computer companies such as Microsoft. Formerly important industry leaders such as General Motors were removed from the list as their importance diminished. The Dow's composition reflects the greater economy.
Though the American economy is no longer dominated by heavy industry, there are still companies on the Dow Index that represent this section of the economy. The construction equipment company Caterpillar is joined on the list by the Aluminum producer Alcoa. As well the oil and gas giant ExxonMobil is joined by the aerospace and defense contractor Boeing. Conglomerates such as 3M, General Electric, and United Technologies also represent part of the greater industrial economy.
Retailers have come to play an increasingly important role in the greater American economy. Reflecting this several major retailers such as Walmart, which joined in 1997, and Home Depot, 1999, are on the list. Food retailers such as McDonald's are on the list as well as the manufacturers of consumer items such as Coca-Cola and Kraft Foods. All of these companies play a major role in the American economy as a whole.
Technology companies have been the major drivers of economic growth in the 20th and 21st centuries. The Dow has added several major technology companies for this reason. The computer and software manufacturer IBM is currently joined by Microsoft and Hewlett-Packard as well as semiconductor manufacturer Intel. The telecommunications company Verizon is joined by the older AT&T as well as Cisco Systems.
Financial institutions make much of the activity in the greater economy possible through the infrastructure that they provide. Partly for this reason the Dow includes several major financial companies. The two major banks of JPMorgan Chase and Bank of America are joined by other financial companies such as the consumer finance provider American Express and the insurance company Travelers.
- Dow Jones: Dow Jones History; 2011
- "Christian Science Monitor"; Dow Jones Industrial Average Rises; November, 2010
- CNN Money: AT&T, Kodak, IP out of Dow; Chris Isidore; April 1, 2004
- CNN Money: Figuring out the Dow; Walter Updegrave; July 23, 2010
- "New York Times"; Dow Jones Stock Market Indexes Said to Be for Sale; Richard Perez-Pena and Michael J. de la Merced; August, 2009
- Wall Street sign image by Jolanta Zastocki from Fotolia.com