DJIA at 115 Years: How It Has Told the American Story

The venerable Dow Jones Industrial Average, the oldest market measure, turns 115 tomorrow.

New York Mayor Michael Bloomberg, who knows a thing or two about financial markets, has declared Thursday May 26 “Dow Jones Industrial Average Day” in honor of the blue-chip measure.
What’s intriguing about the Dow Jones Industrial Average is how its components have tracked the evolution of the American economy for more than a century. Underscoring the present-day need for focus, the DJIA (and other Dow Jones Indexes) is 90% owned by CME Group Inc., with Dow Jones owning 10% of the venture.
The original 1896 DJIA contained 12 components (today it has 30). General Electric is the only original component still in the average, but it did take a brief hiatus in 1898 as Charles Dow fiddled with his creation. (Mr. Dow passed away in 1902.) GE returned in 1907 and has remained ever since.
Along with GE, the original 12 included a lot of companies named “American” (American Sugar, American Cotton Oil, American Tobacco, North American) and U.S. (U.S. Leather (Preferred), U.S. Rubber). The components reflected the commodity-heavy nature of the economy at the time.
Also, the railroads already had their own average, the precursor to today’s Dow Jones Transportation Average. It was created in 1884 and today still includes original component Union Pacific.
As for the Dow, here are a few historical tidbits that you can drop into cocktail party conversation:
U.S. Steel joined the Dow in 1901. It fell out of the average 100 years later. Bethlehem Steel, which joined in 1928, fell out in 1997.
General Motors was the first car company, joining in 1915. It was replaced by Studebaker in 1916. It replaced Studebaker in 1925.
AT&T made its first appearance in 1916, the year the Dow grew to 20 components.
Sears Roebuck became the first major retailer when it joined in 1924. Woolworth joined later in the same year.
The Dow grew to 30 components in 1928, and components included bygone gems such as Nash Motors, Wright Aeronautical, Victor Talking Machine and mighty Standard Oil.
In the 1930s, Coca-Cola and Procter & Gamble joined an average that still included American Smelting and American Can.
The Dow remained unchanged from March 1939 to July 1956 when International Paper replaced Loews that year. Another long stretch of no changed occurred took place from 1959 to 1976. In the bicentennial year, Minnesota Mining & Manufacturing (now 3M) replaced Anaconda Copper.
In 1979, IBM became the first tech firm in the average and Merck became the first pharmaceutical company.
It took until 1991 for a bank to become part of the industrials. That’s the year J.P. Morgan joined.
Intel and Microsoft became the first Nasdaq stocks in the average in 1999. Sears and Goodyear were among the casualties that year.
The most recent joiners came in June 2009 when Cisco Systems and Travelers replaced General Motors and Citigroup.


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