What is the Dow Jones index?
The Dow Jones Industrial Average was founded by Charles Dow in the late 19th century. Dow began his average with 11 stocks, mostly railroads, in 1884. The purpose was to try to make sense of all of the daily ups and downs of stocks that were at all different price levels. People weren’t much into stocks back then, mainly putting their money into bonds, which were backed by tangible assets such as buildings and machinery. But Dow’s index, as time went on, gave people a sense of knowledge and confidence in the stock market. In 1896, Dow introduced the 12-stock industrial average (which the Wall Street Journal began to publish on a regular basis). His original 11-stock average, which consisted mostly of railroads, now consisted of 20 railroad stocks. The railroad stocks average was renamed the Transportation Average in 1970. The Utility Average was put together in 1929, 27 years after Dow’s death in 1902.
