Dow Jones Average
Although the industrial average is the most frequently cited, it has been criticized for consisting of only blue-chip stocks and for its inability to adjust accurately—in spite of a sophisticated mathematical formula—for dividends and stock splits; some analysts feel that other indexes, such as the Standard & Poor's 500, are more accurate reflections of market activity. The average is quoted in points, not in dollars; in 1896, the industrial average was at 40.94 points. In 1972 the average passed 1,000, and in 1999 it closed above 10,000. The industrial average is often taken as an indicator of the stock market's growth or shrinkage (and thus the strength or weakness of the U.S. economy). In 1929 the average dropped more than 12%, reflecting the crash of the stock market and the start of the Great Depression; in the
crash of 1987 the average dropped more than 22%. Other Dow Jones averages include the Dow Jones 20 Bond Average, the Dow Jones Municipal Bond Yield Average, and the Dow Jones Internet Indexes.
The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2012, Columbia University Press. All rights reserved.
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