The Dow Jones Industrial Average is an often quoted index representing the stocks of 30 companies that are considered major players in their industries. It consists of stocks mainly from the New York Stock Exchange (NYSE) with a few from Nasdaq listed stocks. Today it tracks the fortunes of companies such as Apple and Goldman Sachs and is looked upon as an indicator of the strength and prospects of the US economy as a whole.

The DJIA dates back to 1896 where of course, the constituents of the index looked very different.


The DJIA in 1896

The DJIA was created in 1896 with 12 stocks, with General Electric being the only stock that is still in the index today. At the time, each company loosely represented a major industry and so the DJIA was taken to be representative of the overall US economy.

American Cotton Oil Manufacturing
American Sugar Manufacturing
American Tobacco Tobacco
Chicago Gas Oil and Gas
Distilling & Cattle Feeding Manufacturing
General Electric Electricity, Various
Laclede Gas Oil and Gas
National Lead Mining
North American Company Energy, Utilities
Tennessee Coal & Iron Mining
US Leather Manufacturing
US Rubber Manufacturing

With the industrial era coming to close around 1914 at the start of WW1, and electricity becoming widespread, the economy shifted towards consumer goods and almost all of the industrial companies above became less prominent in the US economy.


The DJIA today

Today the DJIA continues to represent the major players in a broad range of industries. As the index today represents a smaller proportion of total companies than in the past, it is perhaps less of an absolute reflection of the strength of the American economy than it has been previously. Interestingly, the majority of the current constituents of the DJIA weren’t in the index prior to 1990.

3M Conglomerate
American Express Consumer finance
Apple Consumer electronics
Boeing Aerospace and defense
Caterpillar Construction and mining equipment
Chevron Oil & gas
Cisco Systems Computer networking
Coca-Cola Beverages
Du Pont Chemical industry
ExxonMobil Oil & gas
General Electric Conglomerate
Goldman Sachs Banking, Financial services
The Home Depot Home improvement retailer
IBM Computers and technology
Intel Semiconductors
Johnson & Johnson Pharmaceuticals
JPMorgan Chase Banking
McDonald’s Fast food
Merck Pharmaceuticals
Microsoft Software
Nike Apparel
Pfizer Pharmaceuticals
Procter & Gamble Consumer goods
Travelers Insurance
UnitedHealth Group Managed health care
United Technologies Conglomerate
Verizon Telecommunication
Visa Consumer banking
Wal-Mart Retail
Walt Disney Conglomerate

The most recent companies to be added are Goldman Sachs, Visa, Nike and Apple.

The index today reflects a change towards a more consumeristic society, where the largest companies are servicing the needs and wants of a global population with ever rising disposable incomes.

Industries such as finance and insurance have also been switched into the index over time reflecting the importance of financial products to both the consumer and business.

The addition of Apple was a nod to the importance of technology within the US economy and with the industry at the forefront of innovation, it wouldn’t be a surprise to see further additions from the technology industry.


Looking forward

It is interesting to note the sheer number of companies that have been switched out of the DJIA over the years, reflecting changes in how the country’s economy is driven. Today, the largest US industries and companies seem unstoppable, with a global reach, strong balance sheets and an appetite to innovate. However, history tells us that there are no certainties and that the morphing climate of a country and its people can change the business landscape in a very short space of time.