When the financial news flashes across your television or smartphone screen, you may notice something called the Dow Jones Industrial Average (DJIA) come up quite often. You may also notice that the financial news tends to mirror the DJIA's numbers. For example, when the financial news is bad, the DJIA is down. But what is the DJIA and why is it so important to financial experts around the world?
It All Started With Charles Dow
Charles Dow founded the Wall Street Journal in 1882 with his partners Edward Jones and Charles Bergstresser. These three men would go on to establish many of the investing practices and terms that remain popular to this day. In 1896, Charles Dow wanted to devise a way to measure the most important stock prices in the market, so he released the Dow Jones Industrial average to track the 30 most important stocks available.
Chief Financial Indicator
The original 30 companies that made up the DJIA all dealt in heavy machinery manufacturing, construction, and other industrial industries. That is why the word "industrial" is in the name. But, over the years, the DJIA has been altered to represent the 30 top companies on the New York Stock Exchange and NASDAQ markets and includes such powerful companies as the retailer Wal-Mart and communications company Verizon.
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