They are talking about the dow jones industrial

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Unformatted text preview: You may have heard news commentators say, “The Dow fell 302 points on heavy trading.” They are talking about the Dow Jones Industrial Average. The Dow Jones Industrial Average (DJIA) first appeared on the scene more than 100 years ago, on The interior and exterior of the New York Stock Exchange. Stocks of close to 3,000 companies, valued at nearly $20 trillion, are traded on the exchange. Dow Jones Industrial Average (DJIA) The most popular, widely cited indicator of day-to-day stock market activity. The DJIA is a weighted average of 30 widely traded stocks on the New York Stock Exchange. Section 1 Stocks 431 16 (428-459) EMC Chap 16 EXHIBIT 16-1 11/18/05 9:33 AM Page 432 The The 30 Stocks of the Dow Jones Stocks the Industrial Average Average 3M Company Intel Corporation Alcoa Incorporated International Business Machines Altria Group, Inc. Corporation American Express J. P. Morgan Chase and Company American International Group, Inc. Johnson & Johnson Boeing Company McDonald’s Corporation Caterpillar Incorporated Merck & Company, Inc. Citigroup Incorporated Microsoft Corporation Coca-Cola Company Pfizer Incorporated DuPont Procter & Gamble Company Exxon Mobil Corporation SBC Communications Incorporated General Electric Company United Technologies Corporation General Motors Corporation Verizon Communications, Inc. Hewlett-Packard Company Wal-Mart Stores Incorporated Home Depot Incorporated Walt Disney Company Honeywell International, Inc. Why did Charles Dow create the Dow Jones Industrial Average? What purpose does it serve today? May 26, 1896. It was devised by Charles H. Dow. Dow took 11 stocks, summed their prices on a particular day, and then divided by 11. The “average price” was the DJIA. (Some of the original companies included American Cotton Oil, Chicago Gas, National Lead, and U.S. Rubber.) When Charles Dow first computed the DJIA, the stock market was not highly regarded in the United States. Prudent investors bought bonds, not stocks. Stocks were thought to be the area in which...
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