A Brief Look at the History of the Dow Jones Industrial Average
Not much had changed in the twelve years between Mr. Dow’s eleven stocks’ first appearance in the daily financial bulletin, Customer’s Afternoon Letter, and the twelve ‘smokestack’ companies that debuted on the Dow Jones Industrial Average on May 26, 1896. An interesting thing to notice is how nearly the entire list is populated by industrial stocks. This is a far cry from the commodity and retail rich list of today. Moving ahead roughly ten years, we find the list has changed little but nearly all agricultural companies (with the exception of American Sugar) have been replaced by more industrial companies and for the first time is a recognizable company on the list; a company that will remain on the list for the next century: General Electric Company. The Dow Jones continues to be dominated by industrial leaders and railroad companies, but over the next decade we will see the list of twelve expand to twenty and although industrial companies are still the major players, agricultural and our first commodity companies will make debuts in Westinghouse and Studebaker. Additionally, the first communication company arrives in American Telephone & Telegraph – and the communication companies are here to stay. This trend is something that we will repeatedly see throughout the century; as technology changes and advancements are made, new companies will be formed/merged/acquired to bring the technology to consumers. Although by no means are the early ‘smoke stack’ companies gone, they are being pushed to the side and forced to make room for a technology explosion. By January of 1930, the Dow Jones will expand even further and make it to thirty companies – a number that will continue into today. Although agricultural and industrial companies are still present, the automotive companies are what truly “arrive” during this time period. We also see our first retail giants take the state with the addition...
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