30 Years on the Dow 

August 19, 2021

Thirty Years on the Dow. 

The Dow Jones Industrial Average (DJI) – known as simply the Dow – is a stock market index that measures the stock performance of 30 large companies listed on the New York Stock Exchange and the Nasdaq. When you hear people say, “The stock market is up today,” they are generally referring to the Dow. 

In May of this year, Caterpillar celebrated 30 years of being part of the Dow. 

History  

The DJIA index was created in 1896 by Charles Dow, Wall Street Journal co-founder and editor, who started a financial news bureau with a colleague, Edward Davis Jones. Like many stock watchers, Dow saw that generally, stocks tend to move in waves toward the same direction as investors react to daily events. Wanting to measure that sort of everyday movement, Dow created the DJIA – initially comprised of 12 of the biggest and most influential companies of the day. Today’s price weighted DJIA calculation is more complicated, but the math in 1896 was relatively simple: At the close of each trading day, Dow added up closing stock prices of the 12 index companies and divided by 12. That was the Dow Jones Industrial Average.  

The DJIA was first published on May 26, 1896 and has become the best-known and perhaps most widely followed stock market index in the world. In 1916, the Dow was expanded to include 20 companies; by 1928, it included 30 companies, which continues to be the number tracked today.  

Management  

The index is managed by the DJSI Index Committee that meets regularly to review the list of components and sometimes makes changes to the lineup. The idea is for member companies to represent major areas of the U.S. economy – and serve as a proxy of sorts for domestic economic health. As the U.S. economy and consumer tastes shift, so will the companies that make up the index. 

In fact, the DJIA components have changed more than 50 times since its inception. General Electric had the longest continuous presence from 1896 until it was removed in 2018. Most recently, Amgen, Honeywell and salesforce.com replaced Pfizer, Raytheon Technologies and ExxonMobil.  

Why It Matters  

There are now approximately 5,000 U.S. indexes with a wide range of methodologies and categorizations that track market movement. However, the Dow continues to be one of the most frequently used indices in the world. It represents about a quarter of the value of the entire U.S. stock market. The companies included in the index are typically regarded as some of the largest, most influential, and well-respected companies in the United States.  

Today, the index is maintained by S&P Dow Jones Indices, an entity majority-owned by S&P Global, and its components are selected by a committee.  

 “By being included in the Dow for thirty years, the index recognizes that Caterpillar is one of the leading companies in the world and reflects the strength of our brand and products we produce. Being seen as a premier industrial company is something we're pleased with as we are just one of thirty companies being recognized this way,” says Caterpillar CFO Andrew Bonfield. 

Want to learn more? Explore our 95+ year history!

 

Dow Jones Sustainability Indices   

Launched in 1999, the Dow Jones Sustainability Indices (DJSI) is a family of benchmarks for investors who believe that sustainable business practices generate long-term shareholder value and want to invest in sustainable companies. The annual DJSI process evaluates numerous corporate economic and social performance factors. 

Caterpillar was named to the 2020 DJSI, including both the World and North American Indices. It marks the 21st time Caterpillar has been included.  

Of the appointment, Caterpillar Chairman and CEO Jim Umpleby said, “Through our enterprise strategy, we are advancing our sustainability journey, providing new opportunities for customers, employees and communities. Sustainability is one of our core values and represents our global team’s commitment to helping build a better world.”

 

What Others Are Saying. 

It’s hard to think about Caterpillar being part of the Dow Jones Industrial index without considering the history of Cat stock itself – which debuted on the New York Stock Exchange (NYSE) on December 2, 1929. 

For nearly a century, we have been traded on the world’s foremost securities marketplace. Of the approximately 3,200 companies listed on the NYSE, Caterpillar (NYSE: CAT) is among only 2% that have been listed for 90 years or more. 

Watch this interesting video produced by CNBC to see what others are saying about Cat stock.  

 

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