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July 3, 2015

July 3, 1884: Dow publishes first stock average

On this day in 1884, Charles Dow published his first stock average. It was meant to show the public how the market was performing, as even many financiers had trouble seeing the big picture.

In the late 19th century, most money was invested in bonds, not stocks. If a company defaulted, bondholders would be able to claim physical assets (machinery, property, etc.); shareholders would have worthless pieces of paper.

At the time, railroads were considered the safest stocks, and Dow’s average reflects that; only 2 of the 11 corporations (Pacific Mail and Western Union) were not railroads.

The present-day Dow Jones Industrial Average was first calculated on May 26, 1896. It had 12 components, as opposed to the 30 in the index today. General Electric is the only initial component still in the index; although it was dropped for a few years in the index’s early days, GE has been in the DJIA continuously since 1907.

The latest addition to the DJIA was Apple, which joined on March 18, 2015. It replaced AT&T, which had been in the index for 99 years.

Four other names have been in the average continuously since the Great Depression: ExxonMobil (then Standard Oil of New Jersey), Procter & Gamble, DuPont, and United Technologies (then United Aircraft).

Cool Fire Technology has a complete history of the various Dow averages.

Image: Stanley Kubrick, “Men working the floor at the Chicago Board of Trade” (1949). Library of Congress number LC-USZ6-2377

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