A brief History of the Dow Jones Industrial Average

A brief history of the Dow Jones Industrial Average (DJIA) would show that it has been a period of ups and downs. It is not shocking that this occurrence would be common since it always depends on the ongoing fluctuations of the stock market. Prior to its May 26, 1896 debut, the DJIA first appeared two years earlier in a different manifestation. Dow Jones published its first average of U.S. stocks in the Customer’s Afternoon Letter (CAL). The CAL was the forerunner to the Wall Street Journal. Dow Jones then published its first Industrial average consisting of the Original Dow Dozen on that May 26, 1896 date. The final closing average was 40.94. Several members of the Original Dow Dozen were American Tobacco, General Electric, North American, and U.S. Rubber.

During its first couple of months, the DJIA was in decline. It was not until there was discussion about the government raising tariffs was when the average rose. From 1897 to 1900, the Dow Jones took an upward climb for the most part. However, during this period, the Spanish-American War affected a decline in the Dow Jones average, but it was only briefly. As the Gold Standard was confirmed in the beginning of 1900, the average nosedived. With the first auto show, the DJIA increased mostly until the assassination of President McKinley in 1901. 1904 was the year when the average saw a healthy spike. Events such as the Panama Canal Treaty, the Wright Brothers’ first flight, and the popularization of motion pictures highly influenced the good feelings of the stock market. From 1906 to the end of 1907, the average took a downturn. The San Francisco earthquake and the Panic of 1907 affected it. When Henry Ford and his Model T debuted in 1908, the upturn in the Dow Jones had already begun. At the end of 1909, the average was at 100.

The recession of 1910 to 1911 decreased the DJIA from 100 to 75. The recession of 1913 to 1914 erased any gains that were made in 1912. The first half of World War I saw an increase in the average, but the latter half saw a dip. Only until victory was in sight and the end of the war were coming to an end that the Dow Jones spiked up again. At the end of 1919, the average was barely over 100 points. The roaring twenties were definitely roaring. Many investors became acquainted with the industrial average. Huge amounts of average citizens began buying stocks by the bundle. The average increased from around 100 in 1924 to nearly 400 in mid-1929. In the 20’s, the industrial average set a record in each of six consecutive years from 1924 to 1929.

On October 28, 1929, the beginning of the Great Depression began. The Industrials were off 38.33 points. The following day, it fell 30.57 points. In less than two weeks, the average would lose nearly thirty percent of its value. Needless to say, the first two years of the 1930’s, the Dow Jones spiraled down. It was not until President Franklin Delano Roosevelt that the market would see an upturn. His New Deal created optimism in the Nation. From 1933 to 1937, the Industrials rose from just above fifty points to close to two hundred points. From the middle of 1937 to the middle of 1938, a recession hit the United States and the average went down.

There was a slight upturn in early 1940, but the panic of Hitler and his regime saw the stock market become nervous and unstable. When the attack on Pearl Harbor occurred, there was a dip in the market and the Industrials. But, around mid-1942, the Dow Jones average took an upswing. The involvement of the Americans in World War II had a very influential affect. This upturn continued until mid-1946. The trepidations of a Cold War between the once U.S. ally Russia and America made the markets unsettled. Nevertheless, the 1950’s was a boom time for the Dow Jones despite the background of the Korean War and the heightened tensions among the two superpowers. The 500 milestone was reached on March 12, 1965. Up to that point, the decade was the best ever for the industrial average. At the end of 1959, the average was around 650 points.

The 1960’s was a very volatile period for the average. The Kennedy inauguration affected the Industrial’s average by moving past the 600 mark and later the 700 point boundary. The Cuban Missile crisis took all of those gains away. Once the crisis was over, the Dow Jones average surged to try to close at the 1,000 point mark at the end of 1965 and the beginning of 1966, but it would never close at that level. The domestic civil unrest in 1966 affected the average in a dismal fashion. The fourth quarter of 1966 saw the Dow Jones under 750 point. Then, from the middle of the fourth quarter of 1966 to the beginning of the third quarter of 1967, an upturn took hold. The assassinations of Martin Luther King Jr. and Robert Kennedy made the average unstable. It was not surprising that there was a downswing of the Industrials through the end of 1969.

The 1970’s was a very schizophrenic decade for the Dow Jones Industrial Average. The recession of 1970 saw the average go down. From 1971 to 1973, the average saw its highs and lows. On November 14, 1972, the average crossed the 1,000 level. However, not long after this barrier had fallen, a recession occurred and the harsh bear market of 1973-1974 set in. The Jimmy Carter presidency saw the Industrials be in a decline for most of its term in office.

The beginning of the Reagan presidency had to deal with a recession and saw the Dow Jones average fall. It was not until the end of the recession at the end of 1982 when the market took an upswing. From 1983 to 1987, the average rose from just over 1,000 points to over 2,000 points. Not until October 1987, did the market fall from under its feet. It was on the 19th of October when the Industrials took a 508 point slide or nearly 23 percent of its value. It was in 1988 when the trend took an upturn and began to make its comeback. At the end of 1989, the Industrials had almost gained back all of its losses.

In the 1990’s the trend of the DJIA was primarily a skyrocket. On April 17, 1991, the average reached the 3,000 point level. The 4,000 mark was broken on February 23, 1995. The 5,000 point level was passed on November 21, 1995. Eleven months later, the 6,000 point level was reached on October 14, 1996. The 7,000 and 8,000 marks were surpassed in 1997. In 1998, the 9,000 threshold was broken. In 1999, the 10,000 and 11,000 marks were reached. Despite the Saddam bear market, a bad real estate market, and the beginning of the Dot-com breakdown, the 1990’s was a prosperous decade.

The main event in the decade of the 2000’s that affected world events and the stock market was the attack on the World Trade Center. On January 14, 2000, the Industrials were at a record 11,722.98 points. In September 2001, one week after the attack, the Dow sank 684.81 points. By September 24th, it was off 14.3 percent, its worst weekly percentage loss in 61 years. The market continued to falter in 2002. While the Dow ended 2003 in an up note, most of 2004 was in a downswing. On April 2, 2004, the membership in the Dow Jones Industrial Average was changed. Eastman Kodak, International Paper, and AT&T were replaced by American International Group, Pfizer, and Verizon Communications. During the last half of the George W. Bush administration, the stock market and primarily the DJIA and its thirty stocks have been volatile as it has been looking for the good ole days. With the dawning of a new presidential administration in January, perhaps, the stock market will see the eyes of the bull once again.