Dow Jones

Dow Jones and company was founded in 1882 by Charles Dow, Edward Jones and Charles Bergstresser. Over the next century, the company grew into one of the biggest players in the financial and business news industry. The firm has also created various market averages, the most famous of these being the Dow Jones Industrial Average (DJIA).

This article will guide you through the information you need to know about trading on the Dow Jones, alongside its comprehensive history, popular trading strategies, and more. We also list the best Dow Jones brokers in 2022.

What Is The Dow Jones?

Dow Jones is known for founding one of the most prominent indices: the Dow Jones Industrial Average. The DJIA is formed of 30 significant companies listed on stock exchanges in the United States.

The company also created and runs the Wall Street Journal, which remains one of the most influential financial publications to this day. One of the co-founders, Charles Dow, wanted to give investors predictions that would help to show whether the stock market was rising or falling.

The first index created by Dow consisted of 12 companies and the first recorded value of the Dow Jones Index, 40.94, was calculated by taking a market average of these firms.

Dow also believed that it was possible to predict the movement in stocks based on the price movement of different types of equities. According to Dow Theory, an increase in industrial stocks will result in a similar trend in transportation stocks, for example. These averages can be used to more accurately predict the movement in share prices across various industries.

Dow Jones Industrial Average trading symbol

History

In 1882, Dow Jones was owned by its three founders Charles Dow, Edward Jones and Charles Bergstresser. Ownership then changed in 1902 when Dow died and the company was bought by Jessie Waldron and Clarence Barron. This pair eventually passed control to the Bancroft Family, who retained ownership until 2007 when Dow Jones and company was bought by News Corp.

Key milestone history dates include:

  • 1896 – The start of the Dow Jones Industrial Average. At this time it consisted of 12 companies: General Electric Co, Laclede Gas Light Co, National Lead, North American Co, Tennessee Coal, American Cotton Oil, American Sugar Refining Co, American Tobacco, Chicago Gas, Distilling & Cattle Feeding Co, U.S. Rubber, U.S Leather and Iron and Railroad Co
  • 1903 – U.S Steel Corp joins the DJIA. It is the largest company in the nation at the time
  • 1916 – The industrial average expands to 20 stocks
  • 1928 – The calculation for Dow is changed – a special divisor is used instead of dividing by the number of stocks. It is still referred to as an average
  • 1929 – Dow falls 23% over two days from the economic crash and recession
  • 1972 – Dow closes above 1000
  • 1987 – In another crash Dow posts its worst-ever percentage loss of 22% over one day (19th October)
  • 1999 – Dow first closes above 10,000
  • 2008 – Dow’s biggest-ever trading percentage gain of 11% (13th October)
  • 2022 – DJIA reached its all-time high at 36,952.65 points

Note, head to the official website for details on quarterly returns and daily trading volumes.

What Companies Are In The Dow Jones?

This is the list of companies currently included in the DJIA (as of July 2022), along with the year they joined the index:

  1. American Express Co – 1982
  2. Amgen – 2020
  3. Apple Inc – 2015
  4. Boeing Co – 1987
  5. Caterpillar Inc – 1991
  6. Cisco Systems – 2009
  7. Chevron Corp – 2008
  8. Goldman Sachs Group – 2013
  9. Home Depot Inc – 1999
  10. Honeywell International Inc – 2020
  11. International Business Machines Corp – 1979
  12. Intel Corp – 1999
  13. Johnson & Johnson – 1997
  14. Coca-Cola Co – 1987
  15. JP Morgan Chase & Co – 1991
  16. McDonald’s Corp – 1999
  17. 3M Co – 1976
  18. Merck & Co Inc – 1979
  19. Microsoft Corp – 1999
  20. Nike Inc – 2013
  21. Procter & Gamble Co – 1932
  22. Travellers Companies Inc – 2009
  23. UnitedHealth Group Inc – 2012
  24. Salesforce Inc – 2020
  25. Verizon Communications Inc – 2004
  26. Visa Inc – 2013
  27. Walgreens Boots Alliance Inc – 2018
  28. Walmart – 1997
  29. Walt Disney Co – 1991
  30. Dow Inc – 2019

Trading Hours

Dow Jones is open from 9:30 am – 4 pm Monday to Friday in New York Time. In UK time, opening hours are 2:30 pm – 9 pm.

Outside of regular market hours, there is also industrial pre-market trading running from 4 am to 9:30 am ET and after-hours trading from 4 pm to 8 pm ET.

Other Indices & Publications

Outside of the DJIA, other indices and publications are currently or were previously owned by the Dow Jones company.

Indices:

  • Dow Jones Industrial Average
  • Dow Jones Transportation Average (Includes 20 transportation companies)
  • Dow Jones Utility Average (Includes 15 US utility stocks)

Dow Jones and company no longer directly control these three indices that they originally founded. In 2012, S&P Dow Jones Indices LLC bought all three. This company is a collaboration between the CME Group and S&P Global.

Publications:

  • The Wall Street Journal
  • Financial News
  • MarketWatch
  • Barron’s

Dow Jones trading signals and volume

Trading Strategies

Various investment and trading strategies can be employed to speculate on the Dow Jones. Popular examples include:

  • Top Ten – This strategy involves making a balanced investment between the 10 Dow Jones stocks with the highest dividend yield at the start of the year. After holding these stocks for the rest of the year they can be sold following the same pattern. This strategy is known to have favourable results over the longer-term
  • Swing Trading – This involves making trades that last a couple of days up to several months. The purpose is to take advantage of an anticipated price move to make a profit and usually involves buying the stock at the top of a cup in a price chart with a stop-loss order placed at the most recent low in the cup
  • Scalping – This is a fast-paced trading strategy that involves making numerous small profits from minor price changes that occur throughout the day
  • Range Trading – By paying attention to live trading charts and graphs it’s possible to make predictions on Dow Jones futures and use this to determine buy and sell decisions
  • News-based trading – This strategy involves buying and selling stocks based on the news and media announcements surrounding respective companies. If a stock receives attention it is likely to fluctuate depending on if the news is positive or negative
  • High-frequency trading (HFT) – These strategies involve using algorithms to take advantage of small or short term changes in the market to make a profit

Does Dow Jones trade after hours overnight futures?

Note, that the best Dow Jones trading strategy will depend on your individual investment objectives and risk appetite. 

Final Word On Trading The Dow Jones

The Dow Jones Industrial Average compares and ranks 30 major companies listed on stock exchanges in the US. As well as the popular index, the organization also set up various financial news brands.

This guide has provided an introduction to the Dow, along with key dates in its history. Use our list of brokers and platforms that offer trading on the Dow Jones to get started today.

FAQ

Is Dow Jones A Price-Weighted Index?

Yes, the components of Dow Jones with the most value will have more influence. As of 8th July 2022, the most valuable stock on the index is UnitedHealth at $521.77, while the lowest is Walgreens Boots Alliance at $37.79.

How Do You Trade The Dow Jones?

The easiest way to trade Dow Jones is through an exchange-traded fund (ETF). ETFs are known for being less volatile than individual stocks since large swings in the performance of specific equities will have a limited impact on the overall index average. As well as being lower risk, ETFs also help diversify trading portfolios.

When Is The Best Time To Trade The Dow Jones?

Regular trading of Dow Jones begins early at 9:30 am EST. The hour ending at 10:30 am EST is often the best trading time of day. This is when the biggest changes occur in the shortest amount of time. Many professional day traders will prioritize trading at this time to make the most of the high volatility in prices.

What Is The Average Return On The Dow Jones From The Last 20 Years?

The average return from 2002-2021 has been 9.51%. Head to live price and volume charts for further insights into historical market data and quotes.

What Is The Future Forecast For The Dow Jones?

The Economic Forecast Agency has made a prediction of 30,296 points for the beginning of June 2024 with a maximum of 32,114 and a minimum of 28,478. Various other forecasts and predictions can be found online.

What Time Does The Dow Jones Start Trading?

Standard trading hours begin at 09:30 ET. Note, that opening hours may vary with Christmas and public holidays.

When Does The Dow Jones Stop Trading?

Typical closing times are 16:00 ET. Note, that closing hours may vary with Christmas and public holidays.

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