10 November 2024
Last week Nvidia, the AI hardware and software provider, joined the Dow Jones Industrial Index, replacing Intel.
What mathematical formula is used to make changes to the Dow?
It may surprise you – there is none.
The Dow Jones index was invented in 1896 by Charles Dow, who cofounded the Wall Street Journal. He selected 12 stocks which he believed best represented the American economy.
These included railroads, tobacco, rubber manufacturing, and sugar refining.
The Wall Street Journal continued to maintain the index, changing the constituents as the American economy evolved.
Looking back 10 years ago, the index had more industrial/engineering companies like General Electric.
In 2024, technology is the dominant portion of the index. Amazon has a market capitalization of over $2bn, while Apple, Microsoft, and Nvidia each exceed $3bn.
Sources:
Charles Dow: wikipedia.org/wiki/Charles_Dow, Market capitalizations: companiesmarketcap.com, Dow Jones index: www.spglobal.com