Dow Jones Industrial Average (^DJI) – Forecast, Rate and Chart, Review

Stock market index

Dow Jones Utility Average

(
DJUA
, also known as "Dow Jones Utilities") is a stock index from S&P Dow Jones Indices that tracks the performance of 15 prominent utility companies traded in the United States. [1]

Components [edit]

Dow Jones Utility Index 1928–2012
Accessed October 27, 2022 [Update]
the current Dow Jones Utilities components look like this (company name followed by ticker symbol): DJUA components showing tickers and utility types

Effective October 1, 2014, American Water Works replaced Williams. [2]

Effective January 18, 2022, Sempra Energy replaced PG&E Corporation. [3]

Effective October 27, 2022, Atmos Energy and Xcel Energy replaced CenterPoint Energy and NiSource, respectively. [4]

Dow Jones Utilities is a price-weighted average.

Assets monitored by Dow Jones

There are no specific rules that establish the standards by which an organization is included in Dow Jones. True, in order to get into the DJIA, a company must play a significant role in the economic activity of the United States and be among the largest participants in the industrial sector. In addition, the securities must be listed on the NASDAQ or NYSE .

The DJIA regularly changes its list of companies to reflect changes in the economy. By 1928, the list had grown to 30 participants, and began with 12. Since then, it has changed 60 times.

The last change was made on August 24, 2020. Salesforce , Amgen and Honeywell were added to the list of stocks tracked by the benchmark, replacing ExxonMobil , Pfizer and Raytheon Technologies .

Annual reports [edit]

The following table shows the annual change in the Dow Jones Utility Index calculated since 1928. [5]
Year-end closing values ​​for DJUA, sortable

Today's Dow Jones Industrial Average

Given the diversity of the global economy, the holdings of just 30 companies are unlikely to have a significant impact on the stock market. At the same time, the Dow index is the most mentioned American market benchmark and remains a good indicator of general trends.

Some experts believe that when DJIA stocks begin to show weakness, the US economy will decline. Two other Dow Jones benchmarks ( transportation and utilities ) can also indicate market and economic trends.

These three Dow Jones indices can be used to confirm each other. In theory, if any of these three Dow Jones indices begin to diverge in direction during a market uptrend, the retail investor needs to take extreme caution.

The current composition of the Dow Jones Industrial Average includes the following companies:

1. 3M - ticker MMM, date of inclusion - 1976.
2. American Express - ticker AXP, date of inclusion - 1982.
3. Amgen - ticker AMGN, launch date - 2020
4. Apple - ticker AAPL, date of inclusion - 2015.
5. Boeing - ticker BA, inclusion date -1987.
6. Caterpiller - ticker CAT, date of inclusion - 1991.
7. Chevron - ticker CVX, listing date - 2008.
8. Cisco - ticker CSCO, date of inclusion - 2009.
9. Coca-Cola - ticker KO, date of inclusion - 1987.
10. Disney - ticker DIS, date of inclusion - 1991.
11. Dow Inc - ticker symbol DOW, date of inclusion - 2019.
12. Goldman Sachs - ticker GS, date of inclusion - 2013.
13. The Home Depot - ticker HD, date of inclusion - 1999.
14. Honeywell – ticker symbol HON, launch date – 2020.
15. IBM - ticker symbol IBM, date of inclusion - 1979.
16. Intel - ticker INTC, inclusion date - 1999.
17. Johnson & Johnson - ticker JNJ, date of inclusion - 1997.
18. JPMorgan Chase - ticker JPM, date of inclusion - 1991.
19. McDonald's - ticker MCD, listing date 1985.
20. Merck & Co. – ticker MRK, date of inclusion – 1979.
21. Microsoft - ticker MSFT, date of inclusion - 1999.
22. NIKE – ticker NKE, date of inclusion – 2013.
23. Proctor & Gamble - ticker PG, date of inclusion - 1932.
24. Salesforce – CRM ticker, launch date – 2020
25. The Travelers Companies - ticker TRB, date of inclusion - 2009.
26. UnitedHealth Group - ticker symbol UNH, date of inclusion - 2012.
27. Verizon - ticker VZ, date of inclusion - 2004.
28. Visa - ticker V, date of inclusion - 2013.
29. Walmart - ticker WMT, date of inclusion - 1997.
30. Walgreens Boots Alliance - ticker WBA, launch date - 2022.

An individual investor can purchase individual assets of any of the 30 companies included in Dow Jones or buy index funds or ETFs that track changes in this benchmark.

The second possible strategy is to buy the so-called " dogs of the DOW ", the 10 highest-yielding stocks in the index.

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Links[edit]

1. Dow Jones Index | Dow Jones Utility Index | Review
2. "Avis Budget Group Set to Join Dow Jones Transportation Average and American Water Works to Join Dow Jones Utility Average" (PDF). www.spice-indices.com. September 23, 2014. Retrieved August 14, 2017.
3. "Sempra Energy Set to Join Dow Jones Utility Average" (PDF). S&P Dow Jones Indices. January 15, 2019. Retrieved May 6, 2022.
4. "Atmos Energy and Xcel Energy Set to Join Dow Jones Utility Average" (PDF). S&P Dow Jones Indices
   . October 20, 2022. Retrieved October 21, 2022.
5. "Dow Jones Utility Average (^DJU) Historical Data - Yahoo Finance". finance.yahoo.com
   . Retrieved February 5, 2022.

History of the creation of DJIA

The DJIA began to be published in the spring of 1896 by the financial news publication Dow Jones & Company , published by Charles Dow and his partner Edward Jones. The daily average was initially calculated as the average of the stock prices of the 12 firms.

They simply added up and divided by 12. Since then, the list of stocks whose quotes are tracked by the index has expanded, and even a special Dow divisor has been developed, which is constantly adjusted.

The Dow Divisor is a periodically changing constant used to calculate the single-point effect of each of the 30 stocks included in the index. Its adjustment is carried out in order to smooth out the consequences of the division of shares ( split ), as well as paid dividends or corporate spins. This ensures a stable index, protecting the Dow Jones from being distorted by one-time events.

Consequently, the movement of the DJIA is affected only by changes in asset prices. More expensive stocks have a more noticeable impact on the movement of the Dow.

The DJIA can be used as a guide to the state of the US economy. The biggest drop in the DJIA in one day occurred on October 19, 1987. The index fell more than 22% .

The second in scale, but not in date, recession occurred on October 28, 1929. It fell by about 12% . Not surprisingly, these declines coincided with times of financial instability in the United States.

It is important to remember that a rise in the index can be caused by a significant increase in the price of one company's assets, especially if the shares are expensive. This compensates for the decline in the capitalization of several other companies.

The Dow shows the average trend of all 30 stocks combined. The direction depends on which side is stronger - either rising stock prices or falling asset prices.

Index calculation method

Initially, DJI was calculated as the arithmetic average of the quotes of its constituent stocks. All securities in the index were given equal weight. However, this method has a significant drawback: the stock with the highest price influenced the final indicator more than other securities. As a result, in 1928, when calculating DJI, they began to use a different calculation technique - the scaled average.

The sum of securities prices in the new formula is divided not by the number of shares, but by a divisor that changes periodically. Recalculation is carried out if the issuer is replaced on the list, during a split of shares (when the number of securities increases due to the proportional split of a share) or consolidation (conversion of several shares into 1 security of the same category). This procedure allows you to maintain the relevance of the index, taking into account changes in its internal structure.

Dynamics and analysis of the Dow family

It is convenient to track the short-term dynamics of the Dow Jones on an online chart. Long-term charts can be found on special resources for investors. The first official DJI value, published in 1896, was 40.94 points. The historical maximum was reached on July 16, 2022 - 27398 points, and the highest close was observed on July 15 of the same year - 27359 points.

At the beginning of October 2022, the figure is about 26,500 points. Thus, over 122 years the index has grown approximately 650 times. However, it should be borne in mind that this impressive figure must be adjusted for inflation.

Famed investor Warren Buffett predicts that the DJI will rise to an incredible 1,000,000 in the next 100 years.

The 100 point mark was reached at the end of 1910. In 1929, the DJI was worth more than 120 points, followed by a protracted Great Depression. The round mark of 1000 points was conquered in 1966. This milestone became a long-term resistance level for a decade and a half.

The next strong acceleration occurred in the 80s and 90s. last century. In March 1999, another round mark was broken - 10,000 points. At the beginning of the 20th century. There was high volatility in the market, and the last powerful upward movement began in November 2016.

Biggest Falls in Dow History:

• 1929 - Great Depression;
• 1973 - oil crisis;
• 1987 - stock market crash on Black Monday;
• 2001 - terrorist attacks in New York;
• 2008 - global financial crisis.

The worst day in DJI history is considered to be October 19, 1987, when the index collapsed by 508 points (more than 22.5%). The best trading session was observed on March 15, 1933: the increase was 15.3%. The worst month for the American stock market was September 1931, when leading companies lost more than 30% of their value. The best month in history was April 1933 (+40.2%).

The Dow Jones family includes the following indices:

• DJI Average is a benchmark of the American stock market, consisting of 30 stocks;
• DJI Average Yield Weighted - a similar index weighted by dividend yield;
• DJ Transportation Average - includes 20 transport companies;
• DJ Utility Average - covers 15 utility companies;
• DJ Composite Average - combines 3 main indexes of the family (65 issuers).

In addition to the American stock market, the Dow family also tracks global trends using the DJ Titans indices. The main tool is the DJ Global Titans 50, covering the world's 50 largest companies.