The Dow Jones Industrial Average (DJIA) is the most well-known stock market index. Since its inception in May 1896, the index has changed its components dozens oftimes. The first change occurred a mere three months after it was founded and has seen numerous companies come and go over the years. For instance, General Electric (GE) was removed in June 2018, and Exxon-Mobil (XOM), Pfizer (PFE), and RTX, formerly Raytheon Technologies, (RTX) were chopped in August 2020.
But, these aren't the only famous names to be dropped from the Dow Index. Other U.S. household names have gotten the boot over the decades - and more are sure to face the same fate in the future. None of the original companies on the index remain.
Key Takeaways
- The Dow Jones Industrial Average consists of 30 American blue-chip companies.
- The index's composition changes at times.
- Some of the most iconic companies in U.S. history have been removed from the DJIA, including General Electric, AT&T, Sears, and General Motors.
- After GE's removal in 2018, none of the original components of the DJIA remained listed on the index.
What Is the Dow Jones Industrial Average?
The Dow Jones Industrial Average, known simply as the DJIA or the Dow, is an index consisting only of large, blue-chip companies that broadly represent the U.S. economy, and has historically included some of the biggest and most influential companies in the world.
A company that loses a large percentage of its market capitalization due to financial distress might be removed from the Dow. Market capitalization is a method of measuring the value of a company by multiplying the number of shares outstanding by its stock price. When companies lose sufficient market cap, they may be removed from the index, such as when AIG was replaced in 2008 amid the financial crisis, which was replaced by Kraft Foods.
As the economy changes over time, so does the composition of the index. A component of the Dow may be dropped when a company becomes less relevant to current trends of the economy, to be replaced by a new name that better reflects the shift.
When the DJIA index initially launched in 1896, it included only 12 companies. Those companies were primarily in the industrial sector, including railroads, cotton, gas, sugar, tobacco, and oil.
Bethlehem Steel
Bethlehem Steel offers a great example of how economic changes over the decades can lead to changes in the DJIA. Bethlehem Steel was at one time the second-largest U.S. producer of steel. By the 1970s, cheaper imported foreign steel was beginning to take its toll on Bethlehem's top-line revenue. By the 1980s, the company began shutting down some of its operations to cut costs in an effort toremain profitable.
Due to its declining business, Bethlehem Steel was removed from the Dow in 1997 after a seven-decade run. The company declared bankruptcy in 2001, and its remaining assets were sold off in 2003. Those assets exist today as part of Mittal(MT).
General Electric
General Electricwasone of the original Dow stocks when the index was created in 1896. However, GE has had a volatile history with theDJIA. It was removed from the Dow twice in the index's early days - it was dropped from the index in 1898 before it rejoined the Dow the following year in1899.
After being dropped again in 1901, it returned to the Dow in 1907, where it was a mainstay for more than a century before being replaced in 2018. In fact, GE was the longest-running DJIA component, lasting 122 years.
There are a number ofcurrent Dow stocks that were also dropped at one point in timeonly to return later. IBM (IBM)joined the DJIA in 1932, but it was absent from 1939 to 1979 before returning for good. Coca-Cola (KO) also joined the DJIA in 1932, but it was not part of the index from 1935 to 1987, before returning. AT&T was removed from the Dow in 1928, 2004, and again in 2015.
Citigroup
The Travelers Companies joined the DJIA in 1997 as part of the biggest single update to the index, when four of the 30 components were changed. In 1998, Travelers merged with Citicorp, and the new combined entity named Citigroup (C)inherited Travelers' spot in the Dow.
Citigroup was subsequently removed from the Dow following the 2008 financial crisis, when the company's market cap shrank by over 90%, and it teetered on the brink of bankruptcy. Travelers (TRV) was spun off from Citigroup in 2002 and went on to replace Citigroup in the Dow in 2009.
Sears
For decades, Sears Roebuck Co., which joined the Dow in 1924, was a household name across America, and an enormous force in U.S. business and consumer culture. Its headquarters in downtown Chicago was the world's tallest building for a quarter century.
Sears was eclipsed as the nation's largest retailer by Walmart (WMT) at the end of the 1980s. About a decade later, in 1999, Sears was removed from the DJIA following a 75-year run.
AT&T
As a sign of the changing times toward information technology as the primary form of communication, the stalwart telephone company AT&T was replaced by Apple (AAPL) in 2015. AT&T was a component of the Dow since 1916.
Pfizer
While Pfizer may have seen a big boost due to its successful COVID-19 vaccines, the company was dropped from the Dow in 2020. This was a surprising move for many, but the index also hosts Merck, which is a similar pharmaceutical company and the index did not need two at a time.
Exxon-Mobil
The oil giant Exxon-Mobil was also deleted from the Dow at the same time in 2020, ending its 92-year inclusion in the index (the second-longest consecutive run behind GE).
What Are the Criteria for Inclusion in the Dow?
The Dow includes 30 large, blue-chip American stocks, but the methodology is largely subjective and does not follow a fixed, quantitative rule. The stocks that are included tend to be exemplars of important sectors of the U.S. economy, have a strong track record of growth, and be of interest to a large number of investors.
Who Chooses the Dow Jones Components?
The Dow Jones Industrial Average's components are selected by a committee, and the index itself is owned by S&P Global, which also runs the S&P 500 index.
What Are the Current Dow Components?
The 30 stocks that make up the Dow Jones Industrial Average, as of 2024 include:
| Dow Jones Industrial Average Components | ||
|---|---|---|
| Company | Symbol | Year Added |
| Amazon | AMZN | 2024 |
| American Express | AXP | 1982 |
| Amgen | AMGN | 2020 |
| Apple Inc. | AAPL | 2015 |
| Boeing | BA | 1987 |
| Caterpillar | CAT | 1991 |
| Cisco Systems | CSCO | 2009 |
| Chevron | CVX | 2008 |
| Goldman Sachs | GS | 2013 |
| The Home Depot | HD | 1999 |
| Honeywell | HON | 2020 |
| IBM | IBM | 1979 |
| Intel | INTC | 1999 |
| Johnson & Johnson | JNJ | 1997 |
| JPMorgan Chase | JPM | 1991 |
| McDonald's | MCD | 1985 |
| Merck & Co. | MRK | 1979 |
| Microsoft | MSFT | 1999 |
| NIKE | NKE | 2013 |
| Procter & Gamble | PG | 1932 |
| The Travelers Companies | TRV | 2009 |
| UnitedHealth Group | UNH | 2012 |
| Salesforce | CRM | 2020 |
| Verizon | VZ | 2004 |
| Visa | V | 2013 |
| Walmart | WMT | 1997 |
| The Walt Disney Company | DIS | 1991 |
| Dow Inc | DOW | 2019 |
Who Invented the Dow Jones Index?
Charles Dow was an American journalist who founded a financial news bureau, originally called Dow, Jones & Co., with a colleague, Edward Davis Jones in 1896. It was launched with 12 of the biggest and most influential corporations of the day. Each was a giant in its sector, and most reflected demand for the raw materials that fed the American economy, like coal, sugar, and oil.
The Bottom Line
The Dow Jones Industrial Average is a stock market index that tracks 30 large public companies in the United States. The index, which was established in 1896, is one of the most widely tracked indexes in the world. As such, it is used as a benchmark or a standard for performance measurement. The index's composition isn't static, which means companies may be removed and added to keep up with the pace of the U.S. economy.
Article Sources
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Library of Congress. "Dow Jones Industrial Average First Published."
The New York Times. "G.E. Dropped From the Dow After More Than a Century."
CNBC. "Exxon Mobil replaced by a software stock after 92 years in the Dow is a ‘sign of the times’."
Citi. "Momentous Encounter Leads to Merger."
S&P Dow Jones Indices. "Icons: The S&P 500 and The Dow."
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