The Dow Jones Industrial Average (DJIA) was created in 1896 by Charles Dow and originally consisted of 12 companies: American Cotton Oil, American Sugar, American Tobacco, Chicago Gas, Distilling & Cattle Feeding, General Electric, Laclede Gas, National Lead, North American, Tennessee Coal and Iron, U.S. Leather, and U.S. Rubber.
At the time, these companies were among the titans of American industry. Of the original 12 companies, General Electric has remained in business (though it’s been split into different companies) and was a component of the DJIA the longest. When it was removed from the DJIA in 2018, it had been a Dow component continuously for over 120 years. Others were broken up, taken over, dissolved, or relegated to subsidiary status over the years.
Key Takeaways
- Created in 1896 by Charles Dow, the original Dow Jones Industrial Average consisted of just 12 stocks, primarily focused on the industrial sector, which dominated America’s economy at that time.
- The first Dow companies were mostly basic materials and heavy industry firms, including American Cotton Oil, American Sugar, American Tobacco, Chicago Gas, Distilling & Cattle Feeding, General Electric, Laclede Gas, National Lead, North American, Tennessee Coal & Iron, U.S. Leather, and U.S. Rubber.
- The original index was calculated by adding up the prices of the 12 stocks and dividing by 12—a basic price-weighted system.
- The simple calculation was designed to help newspaper readers easily understand market movements at a time when most Americans had little experience with financial markets.
Understanding the DJIA
Charles Dow was an American journalist who founded a financial news bureau, originally called Dow, Jones & Co., with a colleague, Edward Davis Jones.
Like any observer, Dow saw that many or most stocks tended to move like a wave in the same direction from day to day as investors reacted to events and expectations. He sought to put a number on that daily movement.
Dow chose 12 of the biggest and most influential corporations of the day. Each was a giant in its sector, and most reflected demand for the raw materials that fed the American economy, like coal, sugar, and oil.
At the close of every trading day, he added up all of their stock prices and divided by 12. That was the Dow Jones Industrial Average.
Introduced in the Wall Street Journal on May 26, 1896, the DJIA was the first index of stock market activity.
Charles Dow created the index as a way to make the stock market more understandable to readers of his newspaper, the Wall Street Journal, marking one of the first attempts to make financial information accessible to everyday Americans.
Changes to the Dow
As the country’s industrial age came to a close, electricity became the dominant energy source and led to numerous technological advancements that were embraced by consumers. The economy shifted toward providing more consumer goods and technology-based services and products.
Most of the original companies in the DJIA were removed from the list long before they went out of business. Then and now, the list of Dow components is revised periodically to remove companies that can no longer be seen as bellwethers and to substitute companies that have climbed to prominence.
The Original Dow 30
In 1928, the Dow was expanded to include 30 companies. These companies have changed over the years, but the index still aims to represent the U.S. stock markets and the economy in general. The following are the first 30 Dow stocks, following the 1928 expansion:
- Allied Chemical
- American Can
- American Smelting
- American Sugar
- American Tobacco
- Atlantic Refining
- Bethlehem Steel
- Chrysler
- General Electric
- General Motors Corporation
- General Railway Signal
- Goodrich
- International Harvester
- International Nickel
- Mack Truck
- Nash Motors
- North American
- Paramount Publix
- Postum Incorporated
- Radio Corporation
- Sears Roebuck & Company
- Standard Oil
- Texas Company
- Texas Gulf Sulphur
- Union Carbide
- U.S. Steel
- Victor Talking Machine
- Westinghouse Electric
- Woolworth
- Wright Aeronautical
Companies Currently in the Dow
The Dow still comprises 30 prominent companies representing a broad cross-section of the U.S. economy. These corporations now span sectors such as technology, health care, finance, consumer goods, and industrials. The companies are chosen to reflect the overall market and economic conditions, making the Dow a barometer of the health of the U.S. economy. Notably, the index includes major players like Apple Inc. (AAPL), Microsoft Corporation (MSFT), and the Coca-Cola Company (KO), each representing leadership in their respective industries.
Unlike market capitalization-weighted indexes like the S&P 500, the Dow is a price-weighted index, meaning the impact of each company on the index’s performance depends on its stock price, not its market size.
Over the years, the composition of the Dow has evolved as the U.S. economy has changed. Companies are added or removed from the index to ensure they accurately represent the modern American economy. For example, Apple was added in 2015, reflecting the growing influence of technology in the global economy. NVIDIA Corp. (NVDA) was added in 2024, a nod to the increasing centrality of the tech related to artificial intelligence. Meanwhile, firms that no longer meet the criteria for economic relevance or have seen a decline in their industry dominance may be removed. Below is a table of those companies that currently comprise the Dow 30.
How Many Original Dow Jones Companies Were There?
Charles Dow chose 12 companies from the biggest and most influential corporations by the end of the 19th century. Each was a giant in its sector, and most reflected demand for key raw materials like coal, sugar, and oil.
Is General Electric Still in the Dow Jones?
No. GE was removed from the DJIA in 2018. From time to time, the composition of the index changes. Like General Electric, some of the most iconic companies in U.S. history have been removed from the Dow Jones, such as AT&T, Sears, and General Motors.
How Is the Dow Jones Industrial Average Different From the S&P 500?
The Dow and the S&P 500 are the most influential stock market indexes, but they differ significantly in composition and methodology. The Dow consists of 30 large, blue-chip companies selected to represent key sectors of the U.S. economy, and it is a price-weighted index, meaning a company’s influence on the index is determined by its stock price.
By contrast, the S&P 500 is a market capitalization-weighted index comprising 500 of the largest publicly traded companies in the U.S., and it reflects their total market value rather than just stock prices. As a result, the S&P 500 provides a broader measure of market performance, capturing about of available market capitalization, while the Dow offers a more focused snapshot of leading, historically stable firms.
The Bottom Line
The Dow Jones Industrial Average was created in 1896 by Charles Dow and originally consisted of 12 companies, each considered a giant in its sector. It was introduced in the Wall Street Journal as the first index of stock market activity. From time to time, the composition of the index changes, but it still contains 30 American blue-chip companies. After General Electric’s removal in 2018, none of the original components of the DJIA remained listed on the index.