Define Dow Jones Average
The Dow Jones Industrial Average (DJIA) is an ongoing measurement that computes the average prices for 30 stocks. All of the companies included in the DJIA are large corporations. The average is figured by an algorithm that is computed by adding the prices of the stocks, then dividing that number by a common divisor.
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History
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The DJIA made its debut on May 26, 1896. It was founded by financial reporter Charles Dow.
Significance
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The Dow Jones Industrial Average is considered to be the most important stock measurements on the New York Stock Exchange, according to the New York Times. It is used as one of the indicators of the current state of the economy.
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Types of Companies
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The DJIA includes the average stock prices of some of the largest corporations in world, including Wal-Mart, General Motors, Exxon Mobile and P&G.
Other Types of Companies
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The DJIA is also comprised of stock prices for high tech corporations such as Hewlett-Packard, Microsoft and IBM. The average includes a variety of industries to better represent the overall health of the economy.
Fun Fact
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It took over 75 years for the DJIA to reach 1,000 in 1972. In less than one year, from October 19, 2006 to October 9, 2007, the DJIA jumped from 12,011.73 to its record high of 14,164.53.
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