The Dow is Close to 20,000
The Dow Jones Industrial Average soared toward 20,000 yesterday – only flirting with the historic level for now, but close enough for government work, as the saying goes. A potential move by the Federal Reserve on the last FOMC meeting of 2016 is certainly one of the factors fueling the trend, but no one knows for sure what will happen and how will the market react.
Meanwhile, we thought to celebrate this historic event by bringing you a few fun facts about the Dow Jones Industrial Average. Ready? Let’s get started.
- The Dow Jones received its name from its two journalist founders: Charles Dow and Edward Jones.
- When the Dow was founded in 1896, it only has 12 components.
- The oldest company listed that is still included today is General Electric, which is part of the index since 1907.
- Interestingly, General Electric was actually one of the original 12 components of the index, but it was dropped not once but twice before it being added for good in 1907… well, for now, anyway.
- Once upon a time, the Wall Street Journal’s markets editor has the responsibility (and honor) of choosing the Dow’s components. Today, there’s an exclusive Averages Committee.
- The popular index first broke 1,000 in 1971 and first broke 10,000 in 1995.
- Following the 1929 market crash, it took the Dow 25 years to bounce back and reach the pre-crash level.
- That wasn’t the worst day for the Dow though. During the Stock Market Crash of 1987 the index lost 22%, nearly a quarter of the total market value. [i]
- The Dow Jones is referred to as “an average” rather than just an index because it’s price-weighted, not market-cap-weighted. Originally, it was calculated by simply adding up the prices of the component stocks and then dividing the result by the number of components.
- Today, the index is not an actual average anymore. It’s calculated by adding the stock prices of the 30 components and the dividing the result by a unique number called ‘the Dow Divisor’, which is updated periodically.
- It’s a common mistake to call the Dow Jones “the oldest index in the world”. It’s actually the second oldest, right after the Dow Jones Transportation Average which was founded by Charles Dow (yep – same guy) on July 3rd, 1884.
At iFOREX, you have the opportunity to invest in the price of the US 30, which is based on the performance of the Dow Jones Industrial Average Future Index. Find out more about the indices we offer and how to trade them in the form of CFDs and take advantage of market volatility.
Any indication of past performance of a financial instrument is not a reliable indicator of current and/or future performance of such financial instrument.