Dow Jones & Co. was founded in 1882 by Charles Dow, Edward Jones and Charles Bergstresser. The first averages didn't include industrial stocks. The focus was on the growth stocks of the time, mainly transportation companies. This means that the first Dow Jones Index included nine railroad stocks, a steamship line and a communications company. It wasn't until May 26, 1896, that Dow split transportation and industrials into two different averages, creating what we know now as the Dow Jones Industrial Average. Charles Dow had the vision to create a benchmark that would project general market conditions and therefore help investors bewildered by fractional dollar changes. The averages were plain old averages. To calculate the first average, Dow added up the stock prices and divided by 11 - the number of stocks included in the index.

Today, the DJIA is a benchmark that tracks American stocks considered to be the leaders of the economy and on the Nasdaq and NYSE. The DJIA covers 30 large-cap companies, which are picked by the editors of the Wall Street Journal.

(What are they? Check here, which is a perfectly respectable use of Wikipedia. Here's what they originally were.) Over the years, companies in the index have been changed to ensure the index stays current in its measure of the U.S. economy. In fact, of the initial companies included in the average, only General Electric (NYSE:GE) remains part of the modern-day average.

Read more.


comparative stock-market crashes:

9/3/29 Dow Jones is at 381
7/8/32 Dow Jones is at 41, a drop of 89%

3/10/2000 NASDAQ is at 5049
3/12/2001 NASDAQ is at 1923, a drop of 62%

1/11/73 Dow Jones is at 1052
12/6/74 Dow Jones is at 578, a drop of 45%

12/27/06 Dow Jones is at 12511
10/27/08 Dow Jones is at 8176, a drop of 35%

(Want to know more? Look here.)