NEW YORK, May 16, 2006 — Dow Jones Indexes today commemorated the upcoming 110th anniversary of the Dow Jones Industrial Average. “The Dow” is the world’s most frequently quoted and longest-serving market indicator of its kind, tracking the pillars of the U.S. economy since its creation by Charles Dow on May 26, 1896. The occasion was marked by the gathering of market leaders at the New York Society of Securities Analysts in New York and the unveiling of a survey that found an overwhelming 78% of the public know the Dow.
“Over the last 35 years, nominal corporate earnings growth — 8.2% compounded — has outperformed U.S. nominal GDP growth — 7.4% compounded — with most of this outperformance coming in the last several years,” said David Malpass, chief economist at Bear Stearns. “Earnings generally outperformed nominal GDP in the early 1990s as globalization deepened and inflation fell, but then reversed with deflation, the Asia crisis and the recession. In the current expansion, the outperformance of earnings over nominal GDP has expanded significantly, as reflation has increased global growth, part of which is captured in faster U.S. corporate earnings growth. We expect this earnings outperformance to shift toward larger capitalization stocks, like those in the Dow Jones Industrial Average, as interest rates increase.”
“Traditionally the first member company of the Dow to report earnings, Alcoa has frequently served as a bellwether for this leader of all market indicators,” said Richard B. Kelson, chairman’s counsel, Alcoa. “And looking back over the 47 years that the company has been a part of the Dow, it has certainly been a successful relationship. Alcoa’s revenues have grown more than $25 billion since we joined the Dow Jones Industrial Average, and the company has contributed 225 of the 11000 point gain since our entry into the Dow in 1959.”
Noted John A. Prestbo, editor and executive Director of Dow Jones Indexes, “Though the Dow Jones Industrial Average started out as a simple indicator scratched out by Charles Dow, it has grown to become the cornerstone of a 5,000-strong family of indexes that cover nearly every aspect of modern investing. Dow Jones Indexes looks forward to building on the work Mr. Dow began so long ago, bringing investors new and exciting ways to understand and access opportunities in the market.”
More than $40 billion in assets are directly tied to the Dow Jones Industrial Average through investment products such as mutual funds, closed-end funds, futures, options and ETFs. In addition to its inclusion in thousands of daily stock tables, the Dow Jones Industrial Average is quoted more than 500 times a day in newspapers, magazines and wire services worldwide. A search in Google reveals an even more prolific record of citation with more than 10 million mentions occurring online. The Dow has also become a part of pop culture, quoted in hit shows like The West Wing and in the Tony Award winning musical, “How Now, Dow Jones.”
As of May 15, 2006, the Dow was at 11,428.77, up 6.64% year-to-date. The index finished 2005 at 10,717.50, down .61% for the year. On May 10, 2006 the Dow Jones Industrial Average closed at a six-year high of 11,642.65, which is 80.33 points, or 0.7% away from its all-time closing high of 11,722.98 on January 14, 2000.
Additional information on the Dow’s history, structure and investable products can be found at www.djaverages.com.