The United States is the largest economy, with fluctuations and changes affecting the whole world. Traders monitor the growth or decline in the market thanks to special financial instruments, among which is the Dow Jones averages index.
History of appearance and structure of Dow Jones averages
Stock indexes show the state of the economy. In the U.S., they include:
- S&P 500 indexes (which includes 500 large companies);
- NASDAQ Composite, intended to analyze the dynamics of high-tech market segment;
- Dow Jones – overall economic development indicator.
The latter is the best known index and characterizes the overall dynamics in the country.
Charles Dow, who also created The Wall Street Journal, developed the Dow Jones Industrial average index in 1884. Originally this financial instrument was for personal use and included shares of 9 railway companies and 2 industrial companies. According to the idea of Charles Dow, Dow Jones Industrial average was to monitor the dynamics of shares to understand whether their value will increase or remain at the same level. As stocks rise, the index rises, and if the Dow Jones begins to decline, then the stock price will soon fall.
The index was officially published in 1896 and was aimed at analyzing industrial companies, as at that time they had the highest capitalization. Dow Jones included 12 companies and used the average arithmetic value of their shares to calculate it. Its first figure was 40.94 p.
Now Dow Jones averages contain various indexes. Its value is determined by a well-known rating agency. The main activities of this company are operations to assign ratings to different countries. In addition, they issue debt securities for stock markets of 26 countries and conduct comprehensive research for investors.
Dow Jones indexes take into account a number of factors, including share fluctuations, real estate market dynamics and others.
The Dow Jones averages index complex includes:
- main index, which includes shares of 30 companies;
- similar to the previous instrument that evaluates dividend yield;
- index, which includes 20 shares of transport companies;
- 15 utility companies and their shares;
- general Dow Jones Composite Average, which includes all the above.
There are also Dow Jones with an attachment for a specific country or region to analyze the economy in them.
Companies that are part of the Dow Jones Average have a total capitalization of $5,695,582.30 million. All of them play an important role not only for the U.S. economy, but also for the world as a whole.