Dow Jones Industrial Average

Charles Dow compiled the index to measure the performance of the U.S. equity market. The Dow Jones index on the New York Stock Exchange ( NYSE) after the Dow Jones Transportation Average, the oldest still existing share index of the United States and presently consists of 30 of the largest U.S. companies.

There are also the so-called Dow Jones Industrial Average Total Return Index ( DJITR ). This is - as the name suggests - is a performance index.

6.1 highs
6.2 milestones
6.3 The best days
6.4 The worst days
6.5 The best weeks
6.6 The worst weeks
6.7 The best months
6.8 The worst months
6.9 Annual Development
6:10 Bull markets
6:11 Bear markets
6:12 composition

Versions

The Dow Jones Industrial Average ( DJIA ) is calculated in different versions, bearing in mind in the media almost exclusively to the price index. The classic Dow Jones index thus contains no dividend payments and proceeds from subscription rights.

However, there are also the so-called Dow Jones Industrial Average Total Return Index ( DJITR ). In calculating the index in addition to the courses also incorporated the dividend payments. It is therefore referred to as a performance index, ie as a share index, which tracks next to the appreciation of the stock and the capital increase through dividends ( reinvested dividends). The DJITR launched on September 30, 1987 with a base value of 2639.20 points.

Another index is the Dow Jones Industrial Average Net Total Return Index. This has made the price plus Net cash dividend. Net cash dividend equal to the dividend less 30 percent withholding tax.

Calculation

The Dow Jones Industrial Average is a price index and includes 30 U.S. companies on the New York Stock Exchange (NYSE). It is calculated without dividends, subscription rights and special distributions, that is, it is a price-weighted index. The Index will be determined solely on the basis of share prices and adjusted only to income from subscription rights and special. The calculation was originally based on the summation of the individual share prices and the subsequent division by the number of shares in the index. The number of shares in free float is not considered.

The Dow Jones index is calculated using the following formula:

P - Courses of the individual values d - Dow - divisor

The inclusion of companies in the index and index exclusions does not follow fixed rules, but subject to the discretion of the publisher of The Wall Street Journal. The calculation is during NYSE trading hours 9:30 to 16:00 local time ( 15:30 to 22:00 CET) updated every second. Shares at a high price fall more into the index as stocks with a low price. In case of stock splits and share consolidations, the Dow Jones index is adjusted by correction factors.

The method is still the same as the introduction of the index, but the divisor is changed to a historical continuity. So capital measures or changes in membership have an adaptation of the divisor result. The corresponding current is published daily in the Wall Street Journal.

The formula for calculating the divisor changes is as follows:

Dt 1 - divisor for the trading day t 1 is to apply dt - divisor for the trading day t Cat - closing prices of the components for the trading day t, adjusted for bonus shares, stock splits, spin-offs and other relevant corporate actions Ct - closing prices of the components for the trading day t

On October 1, 1928, the sum of all the prices of the 30 joint-stock companies by 16.67 was divided. In 1986, the divisor for the first time fell below one. Since July 2, 2010, the value stands at 0.132129493. A price movement for 1 U.S. dollar in stocks of the Dow Jones index therefore corresponds to a motion by 7.57 points ( 1/0, 132 129 493 ).

Meaningfulness

The actual significance of the Dow Jones Indexes is - often criticized - in spite of its popularity. Core point of criticism is that the index composition is determined by the editor of a newspaper. The opening prices of the underlying shares ( constituents ) of a day are not all available for the first index value, as their trading begins at different times. Therefore, some of the previous day's close must be used for the index opening value, which makes meaningful jumps. In addition, the index is price- weighted, leading to an over-emphasis of shares with a numerically high value.

Lastly, there is a price index, in which the dividends paid, which are cut off from the courses ( ex dividend ) not be included as performance indices ( such as the DAX). Thus, the Dow Jones is not for a long-term evaluation of the performance, in contrast to the DAX but suitable for a long -term view of the price development of the included shares. Despite this criticism is the Dow Jones index of the main stock index. He influenced regardless of the calculation, the world's stock exchanges.

Another difference from the DAX is that the composition of the Dow Jones is not primarily directed according to quantitative criteria such as the market value. For example, the most valuable company in the U.S., Apple (market capitalization on March 30, 2012 = 559 billion U.S. dollars ), is not listed in the index, while some companies whose market value is far below the 30 largest in the United States, the Dow Jones are listed, such as Alcoa. Rather, the composition is based partially on the history, so that the majority of relatively old, traditional companies that were able to hold the market for decades, are part of the index. Since the prices of which fluctuate lower is the volatility of the Dow Jones also remains far below that of other indices such as the DAX and the Euro Stoxx 50

Suspension of Trading

In an exceptional volatility of the Dow Jones index was adopted by the U.S. Securities and Exchange Commission United States Securities and Exchange Commission (SEC), the New York Stock Exchange ( NYSE) after a decline in the index of more than 350 points for half an hour and of more than 550 points to close for one hour. The regulation suspending the trade "Rule 80B " (trading halt due to extraordinary market volatility ) entered into force on 19 October 1988.

On 27 October 1997, the trading in the stock market after a decline in prices by 554.26 points was interrupted for the first time in history. On April 15 In 1998, an amended version of the "Rule 80B " in force.

Under this rule, trading is suspended for an hour, if clock to 14:00 local time ( 20:00 CET clock ), the Dow Jones index in comparison to the closing price of the previous day falls by more than ten percent. Decreases the index from 14:00 clock to 14:30 clock by ten percent, the stock market closes for half an hour. Decrease in the prices after 14.30 clock at ten percent, no interruption takes place.

Trading will be suspended for two hours if the losses to 13:00 clock be more than 20 percent. When a decline in the Dow Jones index from 13:00 clock to 14:00 clock by 20 percent, trading is suspended for an hour. Decrease in the prices after 14:00 clock by 20 percent, the stock market closes the rest of the day.

If more than 30 percent of losses occur, the stock market for this day is completely closed, no matter what time the losses are achieved. The sequence on the NASDAQ is aligned with the "Rule 80B " on the NYSE Euro Next.

History

19th century

In order to obtain a benchmark for the assessment of the share price fluctuations, Charles Dow developed the U.S. stock market index "Dow Jones Average", the predecessor of today's Dow Jones index. He was first published on July 3, 1884 "Customers ' Afternoon Letter" and initially consisted of eleven values. Nine stocks were railroads and two industrial companies ( the Steamship Company Pacific Mail Steamship Company, and the money transfer company Western Union).

Railway companies were at that time the largest companies in the United States. Industrial enterprises were considered rather speculative. On February 16, 1885 Charles Dow extended the index to 14 companies. Eleven months later, on January 2, 1886 was a reduction of twelve values . On April 9, 1894, the composition of the Dow Jones Average was changed again. The number of companies remained at twelve.

End of the 19th century flourished the U.S. economy, and it emerged through numerous acquisitions and large industrial companies. The need for information on these companies grew steadily. Therefore Charles Dow created for this area the "Dow Jones Industrial Average ", also referred to as the Dow Jones index. He was first published on May 26, 1896 in the Wall Street Journal and consisted of twelve equities. Of these twelve values, only General Electric is still in the index, albeit with a break of 1898 until 1907.

Charles Dow added up the prices of the twelve shares and divided the sum obtained by twelve then, so was the arithmetic mean. The listing of the Dow Jones Industrial Average was 40.94 points. His all-time low marked the index only two and a half months later, when he fell on 8 August 1896, 28.48 points. In the fall of 1896, the original Dow Jones Average was adjusted for the industrial company and renamed " Dow Jones Railroad Average" ( DJRA since 1970 Dow Jones Transportation Average ). The DJRA launched on September 8, 1896 at 48.55 points. A recalculation of the Dow Jones index was later based on the Dow Jones Average to 1885 (daily rates) and on the basis of various stock indices to 1789 ( monthly rates).

20th century

1907 saw the Wall Street suffered a severe banking crisis. On March 14, 1907, the Dow Jones index lost 8.29 percent, as the shares of the railroad company Union Pacific Railroad, which were used for the most part as security for finance bills, fell by 50 points. On 21 October 1907, the National Bank of Commerce refused to pay in exchanges of the Knickerbocker Trust Company, the then third-largest bank in New York. A day later sparked a mass rush to the Knickerbocker Trust Company of a general panic on Wall Street. The banks demanded back their loans, the share prices in the stock market plummeted. The end of 1907, listed in the Dow Jones index fell 37.73 per cent lower than at the beginning.

Because of the First World War, the stock market was closed in 1914 four and a half months. When the New York Stock Exchange on December 12, 1914 re-opened, the Dow Jones index closed at 74.56 points, up by 4.4 percent over the closing level of 71.42 points on 30 July of the year. In some publications the 12 December 1914 is indicated by 24.39 percent as of the day with the largest percentage drop in history. In reality, there was a change in the composition of the index and not an actual decline. On 4 October 1916, the Wall Street Journal published for the first time a Dow Jones index of 20 stocks. This was until December 12, 1914 calculated back to a closing level of 54.62 points and was on that day by 26.7 percent below the closing level of the Index twelve equities.

On 1 October 1928, the number of equity securities was increased to 30, and the calculation was henceforth a certain divisor that takes into account the stock split. The index level was consistent with the previous index, which consisted of 20 equity securities. An adjustment was not necessary.

The most momentous market crash experienced the world on 24 October 1929. This day is known as " Black Thursday " ( " Black Thursday " ) known. In Europe one knows the day because of the time shift as "Black Friday " because it was here already after midnight. This stock market crash is considered as the cause of the Great Depression. The actual price drop went on for days out and the following bear market reached only on July 8, 1932, its lowest point. On this day, the Dow Jones Industrial Average stood at 41.22 points to 89.19 percent below its peak of 3 September 1929, 381.17 points. It was not until 25 years later, on November 23, 1954, the index closed at 382.74 points again to the record level of 1929.

The largest increase in a day was achieved by the Index on 15 March 1933, 15.34 per cent. It was the first day of trading on the New York Stock Exchange since 3 March 1933. Reason for the trading halt were several bank holidays ( National Banking Holidays ) that have been enacted due to the inauguration of Franklin D. Roosevelt, 32nd U.S. president.

On February 9, 1966, the Dow Jones index overcame in the course of trade with 1001.11 points, the first time the 1,000 -point mark, finished the trading day but with 995.15 points. On November 14, 1972, he graduated with 1003.16 points for the first time over this limit. To 11 January 1973, the Dow Jones rose to a closing level of 1051.70 points. During the oil crisis of 1973 and the global recession of 1974, the index fell to 6 December 1974 at 45.1 per cent to 577.60 points.

The largest fall in one day was Black Monday on October 19, 1987, when the value of the Dow Jones index temporarily fell by 25.3 percent, or 569.18 points during trading. To the end of day, the index recovered somewhat. He ended the trade with a loss of 22.6 per cent at 1738.74 points. The stock market crash spread quickly to all major international trading centers. By the end of October, the stock prices in Hong Kong were 44.1 per cent, in Australia by 42.4 per cent in the UK by 26.0 percent, in Germany fell by 21.8 percent and 12.5 percent in Japan. 15 months after the " Black Monday ", on January 24, 1989, the Dow Jones with 2256.43 points again its level before the stock market crash.

On October 19, 1988 by the U.S. Securities and Exchange Commission United States Securities and Exchange Commission (SEC) has decided to suspend the regulation of trade in an exceptional volatility "Rule 80B " (trading halt due to extraordinary market volatility ). On April 15, 1998, an amended version came into force.

In the 1990s, the index increased rapidly. On November 21, 1995, he overcame 5,000 points on 29 March 1999 the value of 10,000 points. On 14 January 2000, the Dow Jones 11722.98 points marked with a stand that was more than half a decade of the all-time high.

21st Century

Due to the terrorist attacks in New York, the New York Stock Exchange between the 11th and 14th September 2001 was closed for four trading days, since the entire financial district was evacuated. The attacks lost almost all companies, traders and banks in Manhattan staff or business. After re-opening on Monday, 17 September 2001, the Dow Jones index fell by 7.13 percent.

After the bursting of the speculative bubble in the technology sector ( dotcom bubble ) of the stock index fell to a low of 7286.27 points to 9 October 2002. This was a decline from the peak of 14 January 2000 by 37.9 percent. The October 9, 2002 ended the descent. From autumn 2002, the Dow Jones began to rise again. On December 11, 2003, he again achieved a value of over 10,000 points ( 10008.16 ). On 19 July 2007, the Dow Jones index closed at 14000.41 points for the first time in history over the 14,000 mark. A new record marked the stock index on 9 October 2007 with 14164.53 points.

In the course of the international financial crisis in the U.S. real estate crisis originated in the summer of 2007, the Dow Jones began to fall again. From the autumn of 2008, the crisis had an increasing impact on the real economy. As a result, stock prices plummeted worldwide. On 6 October 2008, the Dow Jones since October 26, 2004 ended with 9955.50 points for the first time below the limit of 10,000 points. During the crisis, the volatility of the index rose. On 13 October 2008 he scored with an increase of 11.08 percent the largest percentage gain days September 21, 1932. Two days later, on 15 October 2008, marked the index with a loss of 7.87 percent the largest percentage daily loss since 26 October 1987. at the lowest level since April 14, 1997, the Dow Jones fell on March 9, 2009, when he finished trading with 6547.05 points. Since the all-time high on 9 October 2007, this represents a decrease of 53.8 percent. The trading volume of all listed in the Dow Jones index companies reached in March 2009 with 10.56 billion shares an all time high.

The March 9, 2009 marked the turning point of the descent. From the spring of 2009, the DJIA was back on the way up. On 14 October 2009, since 3 October 2008 he finished trading with 10015.86 points for the first time above the 10,000 -point mark.

On 6 May 2010 resulted in panic selling in the course of trade to that measured by points, massive slump in the Dow Jones index in its history. At 14:30 local time clock ( clock 20:30 CEST) the index fell within 15 minutes at 9869.62 points, corresponding to a loss of 998.50 points or 9.19 per cent. Within minutes, the prices recovered. The Dow Jones closed at 10520.32 points, with a loss of 3.20 percent. September 30, 2010 came the Commodity Futures Trading Commission and the United States Securities and Exchange Commission in a joint report to the conclusion that there had been a liquidity crisis in the so -called flash crash, as a single dealer in the context of hedging transactions 75,000 E - mini contracts have computer controlled only sold dependent on the current trade worth of 4.1 billion dollars.

On 29 April 2011, the DJIA rose, closing at 12810.54 points. Since 9 March 2009, the profit is 95.7 percent. The slowdown in the global economy and the intensification of the euro crisis led to a fall in the American blue-chip index. On 3 October 2011, the Dow Jones ended the day at 10655.30 points. The loss since its peak on 29 April 2011 amounted to 16.8 percent.

The announcement of new bond purchase programs of the European Central Bank and the U.S. Federal Reserve in principle unlimited extent led to a recovery of prices in the stock market. The monetary stimulus played a greater role in price formation, as the global economic slowdown and the position of the company. On September 14, 2012, the index closed at 13593.37 points, up by 27.6 per cent as on October 3, 2011. Trading volume of all listed in the Dow Jones index companies fell in August 2012 to 2.27 billion shares and with it. the decline since the all-time high in March 2009 was at its lowest level since March 1997, 78.5 per cent. Then I insert a new rally, in which a closing price of 15676.94 points, a new all-time high was reached on 18 September 2013.

Performance

The Dow Jones index was calculated back to 1885 (daily rates) and to 1789 ( monthly rates). The series was created by a concatenation of various stock indices with the Dow Jones.

Independent financial market analysis before July 1831
Cleveland Trust Company Index from July 1831 to February 1854
Clement- Burgess index from March 1854 to July 1871
Cowles Index of Industrial Stocks August 1871 to July 1897 and
Dow Jones Industrial Average from August 1897

In the 19th and 20th centuries, the Dow Jones index reached a different performance. 31 December 2000 to 20,726 per cent ( average annual return and between January 1, 1901: 5: Between 1 January 1801 and 31 December 1900, the Index ( 2.2 percent average annual return ) grew by 820.1 percent, 5 percent). The performance in the first half of the 20th century was about 3.1 percent per year, barely higher than in the entire 19th century. Reasons are the effects of the Great Depression and the Second World War, which led to a twenty year bear market ( 1929-1949 ). In the second half of the 20th century, the average annual return was 8.0 percent, well above the performance of 1801 until 1950.

The stagnation of the Dow Jones in the 1970s and the rapid development in the 1980s and 1990s can be recognized by its doubling rate. More than 14 years it took for the index of 1,000 points in 1972 to 2,000 points in 1987 doubled. The doubling from 2,000 to 4,000 points in 1995 lasted eight years. The Dow Jones index two and a half years for the doubling from 4,000 to 8,000 points in 1997.

Beginning of the 21st century slowed the stock index its development again. Between 1 January 2001 and 31 December 2012, he won 21.5 percent of its value ( average annual return: 1.6 percent). Overall, the Dow Jones Industrial Average rose on the basis of back-calculation from 31 December 1789 to 31 December 2012 to 474 688 per cent ( average annual return: 3.9 percent).

In the classical Dow Jones Industrial Average is a price index, in which the dividends paid, which are cut off from the courses not be included ( ex dividend ) as the performance index, the DAX. Thus, the DJIA is not a long-term evaluation of the performance, in contrast to the DAX but suitable for a long -term view of the performance of the included shares. A comparison of the performance of the German stock index DAX is therefore possible only on the performance of the Dow Jones Industrial Average Total Return Index ( DJITR ). Both indices started in 1987. The annual performance of the U.S. index has since been better than the DAX.

The DJITR rose between December 31, 1987 ( 1956.03 points) and 31 December 2012 ( 24987.40 points) to 1,177.5 percent. The average annual return is 10.7 percent. The DAX rose in the same period of 1000.00 points to 7612.39 points ( 661.2 per cent). The average annual yield is 8.5 percent.

Statistics

Highs

The overview shows the all-time highs in the Dow Jones price index (excluding dividends) and as a performance index ( with dividends).

Milestones

On January 12, 1906, the Dow Jones rose with a final score of 100.25 points for the first time over the mark of 100 points. Based on the calculated back to 1885 index, the limit of 100 points was overcome on 22 September 1916, with a final score of 100.77 points for the first time. Other milestones in the development of the Dow Jones had to overcome the 1,000 -point mark in 1972 and the 10,000 -point mark in 1999.

The table shows the milestones of the back-calculated to 1885 Dow Jones index.

The best days

The largest percentage increase in one day occurred on 15 March 1933, when the Dow Jones Industrial Average rose 15.34 percent. It should be noted that it was the first day of trading on the New York Stock Exchange since 3 March 1933. Reason for the trading halt were several bank holidays ( National Banking Holidays ) that have been enacted as 32nd President of the United States of America because of the inauguration of Franklin D. Roosevelt.

The table shows the best days of back-calculated to 1885 Dow Jones index.

The worst day

The largest percentage drop in one day occurred on 19 October 1987, when the Dow Jones Industrial Average fell 22.61 percent. In some publications, December 12, 1914 is designated by 24.39 percent as the worst trading day in history. In reality, it was a recalculation due to a change in the composition of the index and not an actual decline. On September 17, 2001, when the Dow Jones index fell by 7.13 percent, no trade was possible before in the stock market because of the terrorist attacks on 11 September 2001 for several days.

The table shows the worst days of back-calculated to 1885 Dow Jones index.

The best weeks

The best week in the history of the Dow Jones index ended on August 6, 1932 with a gain of 22.67 percent, followed by the week of 25 June 1938, an increase of 16.52 percent, and the week of 13 February 1932 with a gain of 15.27 percent.

The table shows the best weeks of back-calculated to 1885 Dow Jones index. The date refers to the last trading day of the week.

The worst weeks

The worst week in the history of the Dow Jones index ended on 10 October 2008 with a loss of 18.15 percent, followed by the week of July 22, 1933 with a decline of 16.66 per cent and the week 18 May 1940 with a loss of 15.48 percent.

The table shows the worst weeks of back-calculated to 1885 Dow Jones index. The date refers to the last trading day of the week.

The best months

The best month in the history of the Dow Jones index was April 1933, a gain of 40.18 percent, followed by August 1932 with an increase of 34.83 percent and in July 1932 with a profit by 26.66 percent.

The table shows the best months of back-calculated to 1789 Dow Jones index.

The worst months

The worst month in the history of the Dow Jones index was the September 1931 with a loss of 30.70 percent, followed by March 1938 with a decline of 23.67 percent and April 1932 with a loss of 23.43 percent.

The table shows the worst months of back-calculated to 1789 Dow Jones index.

Annual development

The best year in the history of the Dow Jones index was in 1915 with a gain of 81.66 percent, followed by 1843 with an increase of 72.09 percent and 1814 with a gain of 68.58 percent. The worst year was 1931 with a loss of 52.67 percent, followed by 1807 with a decline of 46.35 percent and 1801 with a loss of 38.37 percent.

In some publications are referred to in 1914 with a decline of 30.72 per cent as one of the worst years in history. In reality, it was a recalculation due to a change in the composition of the index. The Dow Jones Industrial Average closed this year compared to 1913 with a decrease of 5.09 percent.

The table shows the development of the back-calculated to 1789 Dow Jones index.

Bull markets

The longest bull market in the Dow Jones industrial average took between 1990 and 1998 a total of 2836 days. The bull market with the largest gain occurred in 1923-1929. Investors gained during this period with shares 344.5 percent. Since 1900, there were according to a study by the US-based analysis company Ned Davis Research 36 cyclical bull markets with an average duration of 751 days (median = 614 days ). The average income was 85.6 percent (median = 69.1 percent).

Bull markets are for a definition of Ned Davis Research gains in the Dow Jones index of at least 30 percent after 50 days, an increase of the index by 13 percent after the expiration of 155 days, or a 30 - percent reversal in the geometric Value Line Composite Index since 1965.

Bear markets

The longest bear market the Dow Jones index lasted 1939-1942 a total of 959 days. The bear market with the greatest loss occurring between 1930 and 1932. Investors lost during this period with shares 86.0 percent. Since 1901 there were, according to a study by the U.S. analysis company Ned Davis Research 36 cyclical bear markets with an average duration of 406 days (median = 363 days ). The average loss was 30.8 percent (median = 26.9 percent).

Bear markets are a definition of Ned Davis Research depreciation of the Dow Jones index of at least 30 percent after 50 days, a decrease of the index by 13 percent after the expiration of 145 days, or a 30 - percent reversal in the geometric Value Line Composite Index since 1965.

Composition

Largest company was on July 6, 2013 IBM with a weight of 11.23 per cent. The largest by weighting ten public companies had a share of 56.04 percent of the total weighting of the Index. General Electric is the longest member of the Dow Jones index. It was one of the twelve companies that were listed in the 1896 newly introduced index and is the only one of the first twelve, which to this day - has held in the index - with an interruption from 1898 to 1907.

The Dow Jones Industrial Average consists of the following companies together (as of February 7, 2014 ).

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