UK Accounting Glossary
The Dow Jones Composite Index is a stock market index comprised of the constituents of the Dow Jones Industrial Average, the Dow Jones Transportation Average, and the Dow Jones Utility Average. The Dow Jones Composite Index is weighted by stock price and quoted in points. To calculate the Dow Jones Composite Index, first the stock prices of the 30 Dow Jones Industrial Average stocks, 20 Dow Jones Transportation Average stocks, and 15 Dow Jones Utility Average stocks are added and divided by 65. That number is then multiplied by a divisor, which compensates for adjustments such as stock splits and substitutions to the index. This figure results in the final value of the Dow Jones Composite Index. The first component of the Dow Jones Composite Index, the Dow Jones Transportation Average, was formulated in 1884 and the second (i.e. Dow Jones Industrial Average) in 1896 by Wall Street Journal editor Charles Dow and statistician Edward Jones. The third component of the Dow Jones Composite Index, the Dow Jones Utility Average, was created in January 1929. The Dow Jones Composite Index itself was created five years later. The Dow Jones Composite Index is also known as the Dow Jones Composite Average.
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This glossary post was last updated: 9th February 2020.