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McDonald's Corporation is the largest component, making up 5. The oil and gas sector makes up This classification includes energy producers, equipment, services and distribution and alternative energy. The largest component is Chevron, with 6. Consumer goods make up This sector includes auto manufacturers and distributors, food and beverage companies, residential constructors and makers of personal and household products.
Companies from this sector include Coca-Cola and Proctor and Gamble, each with approximately 4 percent of the index value. The selection committee chooses stocks based on investor interest, reputation and growth.
Because of the stock limit, the index does not necessarily include all possible industries within a sector. Four additional sectors make up approximately 25 percent of the Dow Jones. The financial sector includes banking, real estate, financial services and insurance.
Representative companies include American Express and Bank of America. Health care consists of care providers, equipment, supplies and pharmaceuticals, as exemplified by Merck and Pfizer. Alcoa represents the final sector, basic materials, which includes mining, metals, chemicals and forestry. Technology The second-largest sector of the Dow Jones, technology, represents Video of the Day.
Brought to you by Sapling. Consumer Services The consumer services sector represents Oil and Gas The oil and gas sector makes up The negativity surrounding the San Francisco earthquake did little to improve the economic climate. At the start of the s, the decade would begin with the Panic of — stifling economic growth for a lengthy period of time.
History would later take its course on July 30, ; as the average stood at a level of Some historians believe the exchange closed because of a concern that markets would plunge as a result of panic over the onset of World War I. When the markets reopened on December 12, , the index closed at This is frequently reported as a large drop, due to using a later redefinition. Reports from the time say that the day was positive. The Dow's performance would remain unchanged from the closing value of the previous decade, adding only 8.
During the s, specifically In , the components of the Dow were increased to 30 stocks near the economic height of that decade, which was nicknamed the Roaring Twenties. This period downplayed the influence of an early s recession plus certain international conflicts such as the Polish-Soviet war , the Irish Civil War , the Turkish War of Independence and the initial phase of the Chinese Civil War.
By July 8, , following its intra-day low of The high of Marked by global instability and the Great Depression, the s contended with several consequential European and Asian outbreaks of war, leading up to catastrophic World War II in On top of that, the United States dealt with a painful recession in and which temporarily brought economic recovery to a halt.
The largest one-day percentage gain in the index, However, as a whole throughout the Great Depression, the Dow posted some of its worst performances, for a negative return during most of the s for new and old stock market investors.
For the decade, the Dow Jones average was down from The strength in the Dow occurred despite a brief recession in and other global conflicts which started a short time later including the latter stages of the Chinese Civil War , the Greek Civil War , the Indo-Pakistani War of and the Arab—Israeli War.
During the s, the Korean War , the Algerian War , the Cold War and other political tensions such as the Cuban Revolution , as well as widespread political and economic changes in Africa during the initial stages of European Decolonization , did not stop the Dow's bullish climb higher.
The Dow's bullish behavior began to stall during the s as the U. The s marked a time of economic uncertainty and troubled relations between the U. To begin with, the decade started off with the ongoing Recession of — Following that, the s energy crisis ensued which included the —75 recession , the oil crisis as well as the energy crisis beginning as a prelude to a disastrous economic climate injected with stagflation ; the combination between high unemployment and high inflation.
However, on November 14, , the average closed above the 1, mark 1, The index closed at During , the index went above several times, and it closed the year at 1, Although the Vietnam War ended in , new tensions arose towards Iran surrounding the Iranian Revolution in The s decade started with the early s recession.
In early , it broke above several times, but then retreated. The largest one-day percentage drop occurred on Black Monday ; October 19, , when the average fell There were no clear reasons given to explain the crash, but program trading may have been a major contributing factor. The index had only two negative years, which were in and The s brought on rapid advances in technology along with the introduction of the dot-com era. To start off, the markets contended with the oil price shock compounded with the effects of the Early s recession and a brief European situation surrounding Black Wednesday.
Even the occurrences of the Rwandan Genocide and the Second Congo War , termed as "Africa's World War" that involved 8 separate African nations which together between the two killed over 5 million people, didn't seem to have any noticeable negative financial impact on the Dow either.
Between late and early , the Dow staggered through the 3, level making only modest gains as the Biotechnology sector suffered through the downfall of the Biotech Bubble; as many biotech companies saw their share prices rapidly rise to record levels and then subsequently fall to new all-time lows.
Over the following two years, the Dow would rapidly tower above the 6, level during the month of October in , and the 7, level in February On its march higher into record territory, the Dow easily made its way through the 8, level in July However, later in that year during October, the events surrounding the Asian Financial Crisis plunged the Dow into a point loss to a close of 7, Although internationally there was negativity surrounding the Russian financial crisis along with the subsequent fallout from the collapse of the derivatives Long-Term Capital Management hedge fund involving bad bets placed on the movement of the Russian ruble , the Dow would go on to surpass the 9, level during the month of April in , making its sentimental push towards the symbolic 10, level.
On March 29, , the average closed above the 10, mark 10, This prompted a celebration on the trading floor, complete with party hats. The scene at the exchange made front-page headlines on many U.
On May 3, , the Dow achieved its first close above the 11, mark 11, The Dow averaged a 5. Glassman and Kevin A. Hassett went so far as to publish a book entitled Dow 36, Their theory was to imply that stocks were still cheap and it was not too late to benefit from rising prices during the Internet boom. Characterized by fear on the part of newer investors, the uncertainty of the s decade brought on a significant bear market.
There was indecision on whether the cyclical bull market represented a prolonged temporary bounce or a new long-term trend. Ultimately, there was widespread resignation and disappointment as the lows were revisited, and in some cases, surpassed near the end of the decade. The seventh largest one-day point drop in DJIA history, and largest at the time, occurred on September 17, , the first day of trading after the September 11, attacks , when the Dow fell However, the Dow had been in a downward trend for virtually all of prior to September 11, losing well over points between January 2 and September 10, and had lost However, the Dow began an upward trend shortly after the attacks, and quickly regained all lost ground to close above the 10, level for the year.
During , the average remained subdued without making substantial gains due to the stock market downturn of as well as the lingering effects of the dot-com bubble. In , the Dow held steady within the 7, to 9,point level range by the early s recession , the Afghan War and the Iraq War. But by December of that year, the Dow remarkably returned to the 10, mark. In October , four years after its bear market low, the DJIA set fresh record theoretical, intra-day, daily close, weekly, and monthly highs for the first time in almost seven years, closing above the 12, level for the first time on the 19th anniversary of Black Monday The initial drop was caused by a global sell-off after Chinese stocks experienced a mini-crash , yet by April 25, the Dow passed the 13, level in trading and closed above that milestone for the first time.
On July 19, , the average passed the 14, level, completing the fastest 1,point advance for the index since One week later, a point intra-day loss, owing to turbulence in the U.
Two days later on October 11, the Dow traded at an intra-day level high of 14, They included future possible takeovers and mergers , healthy earnings reports particularly in the tech sector, and moderate inflationary numbers; fueling speculation the Federal Reserve would not raise interest rates.
When opening that morning, it immediately lost points and overall the DJIA lost more than points for only the sixth time in history, returning to its mid-July lows below the 11, level. A series of "bailout" packages, including the Emergency Economic Stabilization Act of , proposed and implemented by the Federal Reserve and U.
Treasury , as well as FDIC -sponsored bank mergers, did not prevent further losses. After nearly six months of extreme volatility during which the Dow experienced its largest one-day point loss, largest daily point gain, and largest intra-day range more than 1, points , the index closed at a new twelve-year low of 6, Towards the latter half of , the average rallied towards the 10, level amid optimism that the Lates decade Recession , the United States Housing Bubble and the Global Financial Crisis of — , were easing and possibly coming to an end.
During the early part of the s, aided somewhat by the loose monetary policy practiced by the Federal Reserve , the Dow made a notable rally attempt, though with significant volatility due to growing global concerns such as the European sovereign debt crisis , the Dubai debt crisis , and the United States debt ceiling crisis.
On May 6, , the index lost around points over the day, then just after 2: The intra-day change at the lowest point was The event, during which the Dow bottomed out at 9, before recovering to end with a 3.
In the midst of the decade, the Dow rallied its way above the peak from October On May 3, , the Dow surpassed the 15, mark for the first time before towering above the next few millenary milestones thanks to commendable economic reports. During the late part of the s, despite anticipations of post-election selloffs, the Dow rallied significantly after Donald Trump was elected President.
On January 25, , the Dow hit a record high of 20,, an increase of 1, points since his election in November By "fall", the Dow began falling tremendously again for two major reasons: Investing in the DJIA is made widely accessible in equities through exchange-traded funds ETFs as well as in derivatives through option contracts and futures contracts. Due to the advent of pre-market trading , the ETFs provide a very accurate opening value for the average.
Trading is typically carried out in an Open Outcry auction, or over an electronic network such as CME's Globex platform. Dow Futures is one of the most important premarket tool and reflect the mood in which DJIA will open. The divisor is adjusted in case of stock splits, spinoffs or similar structural changes, to ensure that such events do not in themselves alter the numerical value of the DJIA. Early on, the initial divisor was composed of the original number of component companies; this initially made the DJIA a simple arithmetic average.
The present divisor, after many adjustments, is less than one meaning the index is larger than the sum of the prices of the components. Events such as stock splits or changes in the list of the companies composing the index alter the sum of the component prices. In these cases, in order to avoid discontinuity in the index, the Dow Divisor is updated so that the quotations right before and after the event coincide:. The Dow Divisor was 0. With the current inclusion of only 30 stocks, critics such as Ric Edelman argue that the DJIA is not a very accurate representation of overall market performance.
Still, it is the most cited and most widely recognized of the stock market indices.