DOW JONES AVERAGE

stock price average computed by Dow Jones & Company. The averages are among the most commonly used indicators of general trends in the prices of stocks and bonds in the United States. Dow Jones & Company, a financial news publisher founded by Charles Henry Dow and Edward D. Jones, began computing a daily industrials average in 1897, using a list of 12 stocks and dividing their total price by 12. The list of stocks has since been broadened, and the divisor has been adjusted to compensate for stock splits, stock substitutions, and significant dividend changes. Thus, the averages are no longer arithmetic means but are averages in the sense of indicators of general market price trends. The most commonly quoted is the industrial average, based on the prices of 30 selected industrial stocks. The other Dow Jones averages published include one based on 20 transportation stocks, one based on 15 utility stocks, a composite based on all 65 stocks, and several bond averages.