Dow Jones, or more precisely, Dow Jones & Company, is one of the world’s largest business and financial news companies. In daily usage, Dow Jones can also refer to the famous Dow Jones Industrial Average, one of many market benchmarks that the company launched to track the stock market’s overall performance.
Charles Dow, Edward Jones, and Charles Bergstresser formed the company in the 19th century. Today, Dow Jones & Co. still runs The Wall Street Journal and other financial publications, but the indexes have been sold to S&P Dow Jones Indices LLC.
KEY:-
- It was established in 1882 by Charles Dow, Edward Jones, and Charles Bergstresser.
- Dow Jones created the famous Dow Jones Industrial Average (DJIA) along with several other key indexes.
- The DJIA monitors major public companies and is a globally recognized stock market index.
- Later, Dow Jones transferred ownership of the DJIA and related indexes to S&P Dow Jones Indices LLC, a joint venture by S&P Global and CME Group.
Who Is Dow Jones?
The Origin of Dow Jones and Its Impact on the Stock Market
In reality, Dow Jones was named after two of the three co-founders of Dow Jones & Company, which was founded in 1882, rather than a single individual. Charles Dow and Edward Jones came up with the company name, but Charles Bergstresser, the third co-founder, was less well-known. The Wall Street Journal, one of the most prestigious financial publications in the world, was founded by the three in 1889.
Charles Dow became well-known for simplifying difficult financial news for the average person. He thought that in order for investors to know if the stock market was rising or falling, they needed a simple indicator. He chose a collection of industrial stocks to create the first stock index in order to satisfy this need, and he reported an initial average of 40.94.
Dow also introduced the idea that stock market trends could be forecasted. His Dow Theory suggested that rising industrial stock prices should be supported by similar movements in transportation stocks—laying the foundation for analyzing market direction through different sector averages.
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Charles Dow and Edward Jones led Dow Jones & Company until Dow passed away in 1902. After his death, ownership shifted to Clarence Barron and Jessie Waldron. Over time, control was handed to the Bancroft family. In 2007, News Corp. acquired Dow Jones & Company from the Bancroft heirs.
Today, Dow Jones & Company remains a major player in financial journalism, publishing key outlets like MarketWatch, Barron’s, and The Wall Street Journal. These publications continue to operate with editorial independence.
However, the Dow Jones Averages are now owned by S&P Dow Jones Indices LLC, not the company itself.
The Dow Jones Industrial Average (DJIA)
It’s easy to confuse Dow Jones with the Dow Jones Industrial Average (DJIA). Often referred to as “the Dow,” the DJIA is one of the most-watched stock indexes in the world; it includes companies like Apple Inc. (AAPL), Boeing Company (BA), Microsoft Corporation (MSFT), and Coca-Cola Co. (KO).
When the DJIA first started out, there were only 12 companies in industries like oil, railroads, cotton, gas, sugar, and tobacco. It eventually expanded to include 30 firms, which is the current number.2. The DJIA is still regarded as a crucial gauge of the health of the US economy, despite the fact that it is now linked to numerous other areas.
Important:-
Although the Dow Jones Industrial Average rarely changes, there are occasional additions and deletions. These changes often come in batches and always keep total membership at 30 companies.
Dow Jones & Company owned the DJIA as well as many other indexes that represent different sectors of the economy. They included the oldest index, the Dow Jones Transportation Average, which tracks 20 transportation companies, such as airlines and delivery services.7 Another major index is the Dow Jones Utility Average, which tracks 15 U.S. utility stocks.
The DJIA and Its Related Indexes
Dow Jones & Company owns the DJIA along with several other indexes that reflect various sectors of the U.S. economy. One of the oldest is the Dow Jones Transportation Average, tracking 20 companies in the transport sector like airlines and delivery firms. Another key index is the Dow Jones Utility Average, which follows 15 major U.S. utility stocks.
Companies Comprising the Dow Jones Industrial Average
S&P Dow Jones Indices LLC purchased the Dow Jones Indexes in 2012. S&P Global is the primary owner of this joint venture, but the CME Group is also a major partner.
Although the Dow Jones Industrial Average (DJIA) is still the most well-known index among the general public, investors have recently begun to follow the S&P 500 Index more frequently. The Nasdaq Composite Index, which tracks more than 2,500 U.S. and foreign stocks listed on the technology-focused Nasdaq exchange, is another crucial benchmark that investors should be aware of.
Comparing the DJIA, S&P 500, and Nasdaq Composite Indexes
Explain Like I'm Five
Well-known business media sites like MarketWatch, Barron’s, and The Wall Street Journal, as well as a number of financial newswires, are owned by Dow Jones. Charles Dow and Edward Jones, the company’s co-founders, gave it its name.
The Dow Jones Industrial Average (DJIA), a stock index that tracks the average share prices of 30 top U.S. companies, is also frequently referred to as the “Dow Jones.” The Dow is one of the most important indicators used by investors to assess the performance of the stock market as a whole. Although Dow Jones & Co. initially introduced the index, another company now owns and maintains it.
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FAQs
What Exactly Is the Dow Jones?
The DJIA is price-weighted, which means that stocks with higher share prices have a greater influence on the index’s movement regardless of the company’s total market value, in contrast to the majority of major stock indexes that are weighted by market capitalization. For instance, even if the company that issues the $20 stock has a higher total market value, a $100 stock will have five times the impact on the DJIA.
Can You Buy Shares in the Dow Jones Industrial Average?
Exchange-traded funds are one way to purchase Dow shares. However, since the Dow Jones Industrial Average is merely an index, you are unable to make direct investments in it.
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