The Dow Jones Industrial Average, also known simply as the Dow, was first calculated in 1896, to give investors and the general public an idea about how the market was performing. Although it started out with only 12 stocks, the second-oldest U.S. market index currently shows how 30 large, publicly-owned companies have traded. The stocks that make up the Dow are occasionally changed to accurately reflect a cross-section of the economy. In 2018, for example, struggling General Electric was replaced by Walgreens Boots Alliance -- meaning that the last of the original dozen Dow components has now been removed from the index.
GE dumped from the Dow:
- The word “industrial” in the index’s name is essentially historical, as most of today’s 30 companies have little or nothing to do with traditional heavy industry. The current components include such heavy hitters as Apple, Boeing, Coca-Cola, Nike, Pfizer, Verizon, and Walmart.
- Besides GE, some of the other original Dow components included Distilling & Cattle Feeding Company; National Lead; Tennessee Coal, Iron and Railroad Company; and United States Rubber.
- According to the DJIA manager’s website, the Dow favors a company that “has an excellent reputation, demonstrates sustained growth and is of interest to a large number of investors.”