Dow Jones Stocks

by Amanda Harvey

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Introduction

Dow Jones stocks are the thirty stocks which comprise the Dow Jones Industrial Average Index. The companies listed on the Dow are all major American corporations, and they are carefully selected with the intention of using a cross-section of large publicly traded stocks to provide a reflection of the general performance of the stock market. The components of the Dow are changed from time to time with the intention of keeping pace with the changes in industry and economy which affect the stock market.


Which Companies are Represented on the Dow?

Following the reconstitution of the Dow on March 19th, 2015, the index consisted of the companies listed below. Most of the Dow Jones stocks are traded on the New York Stock Exchange, but a few of them are traded on the NASDAQ.

In the area of banking, insurance and finance, American Express, Goldman Sachs, JP Morgan Chase, Travelers, and Visa represent this segment of the Dow stocks.

Five of the companies listed on the Dow are from the sector of computers, electronics and technology. These five companies are Apple, Cisco Systems, Intel, IBM, and Microsoft.

Consumer goods and retail companies are included among the Dow Jones stocks with The Home Depot, Nike, Proctor & Gamble and Wal-Mart.

There are four companies included in the Dow which fall into the sector of health care and pharmaceuticals. These companies are Johnson & Johnson, Merck, Pfizer, and UnitedHealth Group.

Several companies fit into the traditional concept of ‘industry’ which includes areas such as heavy machinery, construction, defense, chemicals, and oil and gas. The Dow Jones stocks which fall into this broad area are Boeing, Caterpillar, Dupont, Chevron and Exxon Mobil.

The food and beverage sector is represented among the stocks with the inclusion of Coca-Cola and McDonald’s.

Telecommunications and broadcasting appear among the Dow stocks, with the presence of Verizon and Walt Disney.

Finally, there are three companies listed on the Dow which are categorized as conglomerates, meaning that they are corporate groups comprised by two or more companies engaged in diverse enterprises - usually under the control of a parent company. These three members of the Dow are 3M, General Electric and United Technologies.

Investing in the Dow Jones

In addition to trading individual Dow Jones stocks, a popular choice for investing in the Dow Jones is through Exchange Traded Funds (ETFs) or derivatives such as options contracts and futures contracts.

The SPDR Dow Jones Industrial Average is an ETF which follows the Dow Jones Industrial Average Index (DJIA). It was first offered in 1998 by the asset management service, State Street Global Advisors, and is commonly referred to as ‘Diamonds’.

Another DJIA associated ETF includes the Proshares Short Dow30, which is related inversely to the DJIA, meaning that if the index is moving down, the ETF moves upward.

There are also ETFs provided by Proshares which attempt to double or even triple the daily performance of the Dow, either correlatively or inversely.

Options contracts on the Dow can be obtained through the Chicago Board Options Exchange (CBOE) and these include regular option contracts as well as LEAP options. Options on the various DJIA associated ETFs are also available.

Futures contracts for the Dow are issued through the Chicago Mercantile Exchange Group (CME).

Conclusion

Whether as the components of a highly respected gauge of overall stock market performance, as individual companies offering investment opportunity, or as the basis of trading ETFs or options, there is no doubt that Dow Jones stocks are important players in the economic landscape.


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