Dow Jones Industrial Average Tops 10,000 (Great Events: 1900-2001)
Article abstract: The Dow Jones Industrial Average, the most widely used benchmark for stock market performance, surpassed an important plateau when it passed 10,000. It took the average less than four years to double in value, bringing new enthusiasm and optimism to the investing public.
Pulse of the Market
When Charles Henry Dow created the Dow Jones Industrial Average (DJIA, Dow) on May 26, 1896, he probably never dreamed that it would become the standard measure of the stock market’s performance for more than a century. At the time, little or no reliable information was available about companies, and crooked brokers and unscrupulous corporate insiders often manipulated stock prices. Prudent investors stayed away from stocks and invested in bonds that paid predictable interest. Because not all stocks moved in the same direction at the same time, it was difficult to know whether stocks were generally rising or falling.
Dow created the DJIA by taking an average of the prices of twelve stocks. In 1916, the DJIA was expanded to include twenty stocks. The number was raised again in 1928 to thirty, where it remains. When the DJIA’s peaks and troughs increased progressively, a bull market prevailed. When both the peaks and troughs progressively declined, it was considered a bear market. Although Dow used the word “industrial” in naming the average, the DJIA has represented a cross-section of the economy....
(The entire section is 875 words.)
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