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A Brief Look at the History of the Dow Jones

A Brief Look at the History of the Dow Jones Industrial Average Not much had changed in the twelve years between Mr. Dow’s eleven stocks’ first appearance in the daily financial bulletin, Customer’s Afternoon Letter, and the twelve ‘smokestack’ companies that debuted on the Dow Jones Industrial Average on May 26, 1896. An interesting thing to notice is how nearly the entire list is populated by industrial stocks.

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This is a far cry from the commodity and retail rich list of today. Moving ahead roughly ten years, we find the list has changed little but nearly all agricultural companies (with the exception of American Sugar) have been replaced by more industrial companies and for the first time is a recognizable company on the list; a company that will remain on the list for the next century: General Electric Company.

The Dow Jones continues to be dominated by industrial leaders and railroad companies, but over the next decade we will see the list of twelve expand to twenty and although industrial companies are still the major players, agricultural and our first commodity companies will make debuts in Westinghouse and Studebaker. Additionally, the first communication company arrives in American Telephone & Telegraph – and the communication companies are here to stay.

This trend is something that we will repeatedly see throughout the century; as technology changes and advancements are made, new companies will be formed/merged/acquired to bring the technology to consumers. Although by no means are the early ‘smoke stack’ companies gone, they are being pushed to the side and forced to make room for a technology explosion. By January of 1930, the Dow Jones will expand even further and make it to thirty companies – a number that will continue into today.

Although agricultural and industrial companies are still present, the automotive companies are what truly “arrive” during this time period. We also see our first retail giants take the state with the addition of Sears & Roebuck and Eastman Kodak. Additionally, the first aviation and oil companies make their debuts. Oil will continue to be a driving factor of our economy and we will, over the coming decades, see this expansion.

Through the 1930s and ’40s, we see the arrivals of Loew’s, Paramount (who departs by 1932), Coca-Cola, Procter & Gamble, United Aircraft, and American Telephone & Telegraph – all companies that required new advances in technology since the Dow Jones inception half a century before. Additionally, companies like Coca-Cola, Eastman Kodak, Loew’s & Paramount represent a shift in consumer sentiment for commodities that require discretionary spending.

By the end of the fifties, mining operations like Anaconda Copper and International Nickel would still be topping the list, but much of the Dow Jones thirty was divided neatly into half industry and half commodities. Two years later Coca-Cola would make its triumphant return to the DJ top thirty along with a new player, Boeing, that would be the death knell for the railroad giants of old. Over the next several years, little changes on the top thirty; a heavy equipment manufacturer, an amusement park/movie studio, and an investment bank all take to the list, which remains relatively unchanged for the next decade.

But in 1997, three ancient players (Westinghouse, Bethlehem Steel, & Woolworth) are replaced by newcomers Hewlett-Packard, Travelers Group (later Citigroup), and retail giant Wal-Mart. With the “smoke stack” industries slowly fading away and the commodity rich list taking a firmer and firmer hold on the Dow Jones (not to mention the complete lack of agricultural businesses) signifies the dramatic shift from the Dow Jones of old to the tech/retail heavy DJ of today.

By 1999, Goodyear, Union Carbide, Chevron and Sears would be replaced by home improvement retail giant Home Depot and tech heavy companies Microsoft, Intel, and SBC Communications. Again, aside from a few name changes (MM&M becomes 3M, Philip Morris becomes Altria, etc), it is not until April of 2004 that any changes are made to the Dow Jones thirty with one telecommunications giant (Verizon) replacing another (AT&T) and we see the fall of Eastman Kodak as they lose sight of technology with the advent of the digital camera.

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