Why Investors Still Look at the Dow Jones First

With the recent 130th anniversary of the Dow, let's take a closer look at why this old and narrow index still commands so much attention.

Until the S&P 500 began circulating in the 1950s – and then NASDAQ in the 1970s – the Dow was the most widely quoted measure of the market's health each day, but it was not the first market index, or even the first "Dow" measure. Dow Jones & Company was founded in 1882, and its first index, widely known as the "Railroad Average," was created in 1884 and consisted of 11 stocks, all but two of which were railroads.

The first Dow index was published daily in a news sheet that later became The Wall Street Journal, originally called Customer's Afternoon Letter. In the mid-1890s, after these rails were "derailed" in the Panic of 1893, Dow Jones decided to diversify, so 12 industrial stocks were chosen to create a wider diversity:

A quick survey of those 12 names makes it clear that most stocks don't live forever. Only General Electric has remained on the list from 1896 until now – although GE was removed (and then reinstated) twice. Most of these 12 names were merged into other companies, which required Dow to adjust the index.

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Fuente original: Yahoo Finance (https://finance.yahoo.com/markets/stocks/articles/why-investors-still-look-dow-141700134.html)