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Dow Jones Industrial Average

Autor:   •  February 23, 2014  •  1,127 Words (5 Pages)  •  177 Views

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Dow Jones, S&P 500, NASDAQ

The Dow Jones Industrial Average or the DJIA is a stock market index which is comprised of 30 large publicly owned companies which are based in the United States and traded on the stock market. It was founded by Charles Dow on May 26th, 1896 and showed the dollar averages of stocks from 12 leading American companies. The original 12 companies were purely industrial companies. GE is the only original active member as of today. In the early years of the Dow, the index stood at a level 40.94 but as the first decade of the 1900s became, the average was able to increase to the vicinity of 100. Many specialists believe that this figure could have been higher if it weren’t for major financial crisis in the Panics of 1901 and 1907. In the 1910s, the Dow suffered when the New York Stock Exchange was suspended on July 30th 1914 for a four month period. The pause in trading caused the Dow average to drop almost 25% to 54. This huge drop however could have also been due to the addition of 8 more companies and resulting mathematical discrepancies. The closing value of the 1910s ended up only being 5% higher than the closing level of the previous decade.

The 1920s showed a time of massive improvements and growth by the Dow as it expanded to 30 stocks. Before the great crash in 1929, the Dow peaked at 381.17. The 1920’s were a time of great economic success. During the 1930s however, like the rest of the country, the Dow suffered greatly. It posted negative returns for most of the decade and closed at 148 which was a 48% drop from the 20s. The 1940s and 50s was a time of bullish growth for the Dow as it grew from 148 to 616 in two decades. This was due to a feeling of peace and prosperity following the end of World War II. In the 1960s, the Dow still managed to grow even through Cold War political affairs. In that decade, the Dow grew to 800. The 1970s was a time of unpredictability for the Dow. On November 14th, 1972, the Dow hit the 1000 mark for the first time but soon after that the market crashed and caused the Dow levels to even out for the rest of the decade. In the 1980s the Dow made a 228% increase to hit 2,753 despite market crashes, recessions, and political turmoil in the decade. The 1990s marked a time a unbelievable growth for the Dow. It consistently hit record figures due to the internet boom. Totals gains for the decade exceeded 315% to reach the level of 11,497. In the first decade of the 21s century, the Dow saw both rapid growth and rapid losses. On July 19, 2007, the Dow saw the fastest 1000 point climb ever as the average increased to 14,000 for the first time, but only two years later the average dropped to a 12 year low of 6,469.95. This decade can be characterized by its instability and as a result the Dow ended up with negative results for the decade. The Dow dropped from 11,497 to 10428 in the decade

*The DJIA is important because it

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