However, two main railroads were eliminated from DOW Index, which were Central Pacific Railroad and Central Railroad of New jersey. Every next day this exchange becomes larger and larger and after all, on 2 January 1886, the number of stocks represented in wall street journal becomes 12 to 14.

In those days daily two pages financial news bulletin was posted on the wall street journal. In 1984, Charles Dow created his first stock market, which contains nine railroads and 2 industrial companies. This industrial average was first time calculated on and now it is the 2nd oldest stock market index in the United States. Nowadays the company is owned by S&P Dow Jones Indices. The value of divisor is one or less than one so that is why the value of the index is larger than the prices of the components.Ī > Dow Jones Industrial Average or DJIA was created by wall street journal editor and co-founder of company Dow Jones & company, Charles Dow. The purpose of this whole method is to generate the consistent value for the index. Changes in Divisor occurs whenever the some components of a stock has a stock split or stock dividend. These stock components are divided by a Divisor.

The value of DOW is not the actual average of prices of stocks or components. The industry is currently Scaled average. About 30 components have little or nothing to do with traditional heavy industry. Industrial portion of Dow Jones Industrial Average is Historical. The one and only sector which is not represented by DJIA is the Utilities Sector. Rests of the companies are assigned from remaining sector found in Global Industry Classification System.

DJIA is no longer a true proxy for the industrial sectors, but only the fraction of companies that make up the Dow are classified industrials. A > DJIA consists of 30 large-cap Blue chip companies.

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