Dow 30 Index – Share Price, Chart and Forecast
The Dow Jones Industrial Average index provides an overview of the potential movement in the U.S. stock market. Given its purpose, the Dow 30 index is popular among investors, and market participants are enthusiastic about investing in the index. Before making any investment in Dow 30 (USD30), it is highly recommended that traders consider key aspects and features of the index and understand what makes this index a good buy opportunity. Read on to learn more about this leading index.
What is the Dow 30 Index?
Dow 30 tracks the performance of the U.S. stock market and provide an insight into the overall market’s health. Let’s investigate it in detail.
Dow 30 Definition
Dow 30 is one of the most popular and among the oldest stock market indices globally and the second oldest stock market index in the U.S. Its trading symbols are DJI and DJIA. The index is also known as Dow Jones Industrial Average index, the Dow and Dow Jones. Dow 30 index comprises of 30 blue-chip companies from different industries except for companies from the transportation and utility industry. It is managed by the S&P Dow Jones Indices.
Today, the Dow index includes 30 publicly traded stocks listed on the NASDAQ or NYSE, and it is one of the most followed indices globally. Quite often, when someone states that the market has moved up or down, it usually refers to the movements in the Dow index value.
Dow 30 History and Evolution
The DOW30 was created by Charles Dow and Edward Jones in 1896, after a spin-off of the Dow Jones Transportation Average. The index was originally composed of 12 companies , mostly industrial ones (American Cotton Oil, United States Rubber Company, American Tobacco…) that had crucial importance for the U.S. economy.
Dow 30 index has a history of more than 120 years, and during this period, it has survived some major events and went through major changes in its composition. The number of companies included in the stock was updated on two occasions. Once in 1916, when the number of constituents was expanded to 20 stocks. Then, in 1928, when it was increased to 30 companies. In 1928, Dow started using a divisor in its calculation instead of just dividing by the number of stocks.
Dow 30 Index Today
Due to its popularity and importance for the U.S. economy Dow Jones 30 today is of interest for institutional and individual investors.
Since its inception, the Dow Jones index composition has been updated around 60 times, during which stocks have been removed and new stocks included. Changes in the economy and in the economic importance of industries meant the index composition needed be modified. Therefore, none of the original 12 components is no longer included in Dow 30 index today. The last stock to be removed from the index after more than 100 years was General Electric, excluded in 2018. It was replaced by Walgreens Boots and Alliance (WBA).
The Dow 30 Price Evolution
The Dow index has been through a fair share of ups and downs under pressure from various economic and political factors and events.
Dow 30 Chart
The DOW30 has experienced a significant increase in value during its lifespan while it also went through the Great Depression and other major market crashes. The following DOW 30 chart provides an insight into its price movement in the last 100 years.
The graph shows an overall upward trendy movement for DOW 30 in the last century. Nevertheless, the bullish trend is interrupted with price reversals on a couple of occasions. Some reversals have lasted even up to ten years before the value returns toward the initial upward trend.
How is the Dow 30 Price calculated?
Unlike other indices, the DJIA index is a price-weighted index, where the weights of each stock in the Dow 30 list are calculated based on their prices. The index value is derived by adding up stock prices and dividing the sum with a divisor. The index divisor is adjusted following relevant company actions, such as alterations in price, stock splits, special dividend, mergers, acquisitions…
Dow 30 Price and Returns: Key Figures
- Dow Jones index hit an all-time-high (ATH) of 35,551 points in August 2021.
- Its all-time-low (ATL) of 41.22 points occurred in 1932, during the Great Depression. It lost around 90% of its value.
- Among the worst days in Dow Jones history is the day known as Black Monday (19 October 1987) when it fell by 22% or 508 points.
- Throughout the 2008 financial crisis, Dow30 recorded its biggest daily point loss on 29 September 2008. Its value plunged around 777 points or nearly 7%.
- Looking at the returns for the last couple of decades, the Dow Jones index recorded the largest loss in 2008 when it had a negative annual return of -31.99%. The index’s highest annual return was in 2013, at 29.41%. (Source: Yahoo Finance)
While in the short run or on a year-to-year basis, Dow Jones may experience negative movements in its average returns, it has generated significant long-term returns. According to Roger Wohlner (from WealthSimple), the average annualised returns during the last 10, 20 and 30 years are 15.03%, 7.03% and 10.99%, respectively.
What Influences the Price of Dow 30 Index?
Given the Dow 30 stocks composition and its position in the financial markets, its price may be under strong pressure. Accordingly, the Dow Jones index value might change from factors such as:
- Natural disasters, wars, political turbulence and other global events
- Economic reports related to indicators like unemployment rates, GDP value, interest rates… Fluctuating energy prices and strengthening or weakening USD
- Market sentiment
- The decision made by the FED related to its monetary policy affects the economy and the value of Dow 30 companies.
Dow Jones may also fluctuate because of its structure and the methodology used to determine its value. As a price-weighted index, stocks with higher prices per share will affect the DJIA value the most. Consequently, significant price changes in stock with higher weight may cause fluctuation in index value, while this change is not a true replication of the market movement.
The Dow 30 Companies and Components
The biggest companies based on market capitalisation included in the Dow 30 index today are Apple and Microsoft Corp. Dow 30 components come from mostly from the sectors of technology, finance and consumer goods.
The company selection process is handled by a committee of representatives from S&P Dow Jones Indices and from The Wall Street Journal. There are no specific rules for the inclusion of stocks. However, for a stock to be considered for possible addition, it should fulfil some criteria such as:
- The majority of revenues are generated in the U.S.
- The stock receives interest from a great number of investors
- The company shows a history of sustained growth
- It is a reputable company
- The stock should be incorporated and have its headquarters in the U.S.
- The company’s activities have crucial importance for the economy
Dow 30 List of Stocks
Dow 30 stocks list today is shown in the following table, ranked according to market capitalisation.
|Visa Inc||V||Financial Services|
|JPMorgan Chase & Co||JPM||Financial Services|
|Johnson & Johnson||JNJ||Health Care/Life Sciences|
|UnitedHealth Group Inc||UNH||Financial Services|
|Home Depot Inc||HD||Retail/Wholesale|
|Procter & Gamble Co||PG||Consumer Goods|
|Walt Disney Co||DIS||Media/Entertainment|
|Nike Inc||NKE||Consumer Goods|
|Cisco Systems Inc||CSCO||Technology|
|Coca-Cola Co||KO||Consumer Goods|
|Verizon Communications Inc||VZ||Telecommunications|
|Merck & Co Inc||MRK||Health Care|
|Honeywell International Inc||HON||Business/Consumer Services|
|Goldman Sachs Group Inc||GS||Financial Services|
|American Express Co||AXP||Financial Services|
|Boeing Co||BA||Industrial Goods|
|Amgen Inc||AMGN||Health Care|
|International Business Machines Corp||IBM||Business|
|Caterpillar Inc||CAT||Industrial Goods|
|3M Co||MMM||Business/Consumer Services|
|Dow Inc||DOW||Basic Materials|
|Walgreens Boots Alliance Inc||WBA||Retail/Wholesale|
|Travelers Companies Inc||TRV||Financial Services|
Should I Trade the Dow 30? Points to Consider
Some of the reasons that support the Dow Jones index as a feasible investment are:
- The index gives exposure to a basket of large and reputable stocks, while diversifying the risk of investing in a single stock. The DJIA index thus gives a certain level of stability and risk dispersion.
- It is a good long-term investment, and it has generated hefty returns during the last decades.
- There is lower volatility associated with indices compared to individual stocks.
- The index is not resistant to short term changes in underlying factors; hence it may experience a sizable fluctuation throughout the year, which is alluring to traders.
- The index includes some of the most popular U.S. companies. Hence, traders benefit from movement in the prices of these stocks.
- Dow 30 is an alluring investment option for risk-averse investors who want to take a more conservative investment approach. The companies included in the stock are quite resistant to negative economic conditions, and could provide steady growth.
- It records an upward movement in the long run, makes it an attractive trading asset for traders and long-term investors.
How Can I Trade the Dow 30 (US30)?
So, how do I put my money in the Dow 30 index? Although the DJIA index cannot be bought or sold directly, investors can trade instruments associated with the index. Some of the available options to invest in the index are index funds or Exchange Traded Funds. Investors can hedge risk through Dow 30 futures.
ZFX broker offers opportunities to traders to gain exposure to movements in Dow 30 (US30) index value by trading CFDs. Traders may want to consider ZFX, because they can trade with low fees and through the reputable MT4 platform. Also, ZFX offers generous leverage for trading CFDs with a minimum deposit as low as $50. Here’s how to get started.
1 – Open an Account with ZFX
Opening an account is easy once you access the ZFX website. First, select one of the available options, as shown in the next image.
Select “Open a live Trading Account”, or “Open an account” in the upper right corner. The next window will appear.
Fill in the required information and follow the indicated steps. ZFX also gives traders an opportunity to open a demo account. There, you are able to practice your trading skills before you invest real money.
2 – Verify your Account
After you open a live account, ZFX will need to verify your account. The documents accepted are:
- National ID
- Drivers’ License
ZFX will ask you to scan your document, and will also ask you to verify your bank account by uploading a copy of your bank statement or a copy from your bank book.
3 – Fund your Account
Traders have multiple methods to fund their accounts, including bank wire and credit cards. To proceed, go to myZFX and log in with your details. Then, go to the “Deposit” section and follow the instructions.
4 – Start Trading on the US30
Another benefit of using ZFX is its easy-to-use MT4 trading platform. To start, download MT4, open the platform, and log in with your details. Then, find the US30 index in the “market watch” section and double click it. The buy and sell orders are performed when you fill in the desired elements and select the trading position you want to open.
Tips and Things to Know Before Investing in the Dow 30 Index
Before you start trading DJIA index, consider some of these recommendations.
1 – Follow important news and events
Various domestic and international events influence the value of DOW 30. Accordingly, traders need to follow economic and political news and announcements and check for possible changes in macro and microeconomic indicators.
2 – Track changes in the company’s fundamentals
You also need to monitor company-specific factors, especially the ones with higher weight. Changes in revenues, business activities, mergers, stock splits, dividend payouts, etc., might positively or negatively impact the stock price.
3 – Know the trading sessions
There is increased volatility during trading sessions, and changes in factors or the occurrence of relevant news and events will be reflected in the index value during these hours. The trading sessions for Dow Jones CFDs are: Sunday 18:01 – Friday 16:55 Open, Trading Days 16:15 – 16:30, 16:55-18:01 Closed, Friday 16:15 Closed (New York time).
4 – Avoid panic-sell
During increased volatility or a market dip, don’t jump into the selling mode. Remember that Dow Jones 30 is composed of well-established companies, with an extremely low possibility that any of the companies will go bankrupt. Actually, experienced investors and traders see the periods of “panic sell” as an investment opportunity to buy financial assets cheaply and at large discounts.
5 – Index movements provide an overview of market activity
Changes in prices may be a good way to gain an insight into the overall market conditions. Although indices don’t represent the entire economy, they track the movements in stock prices of companies with major economic impact or companies of crucial importance for the economy.
6 – Examine the causes behind any increase or decrease in value
Traders and investors should understand the reasons that cause changes in Dow Jones 30 index. This is especially important for companies with higher priced stocks – they’ll have a higher impact on DJIA value.
7 – Short term volatility, long term stability
Don’t forget that while in the long run, Dow 30 may achieve stable growth and offer a certain level of return, it has increased volatility in the short run.
8 – Pick the right trading strategies
Based on the manner in which the Dow Jones index value may fluctuate and the features of CFDs, traders can thus use different strategies to make successful trades. Hence, they might decide to implement a news trading strategy, breakout strategy, trend trading strategy, swing trading, etc.
9 – Demo practising is important
Don’t neglect the practical aspect of demo trading because it gives you an insight into the trading process and helps you feel the trading system.
Dow 30 Index Future, Forecast and Predictions
The upcoming period may be turbulent for the DJIA index because of possible monetary policy changes and, more importantly, uncertainties related to the Evergrande debt level. Analysts expect that the index value may experience increased because of these economic factors. Moreover, although the COVID-19 consequences are weakening, changes in measures or potential new lockdowns could adversely affect the market and, consequently, the index.
However, DJIA forecasts also show that its value might see a rise in the next few years, reaching a high level of more than 40,000 points by early 2023 with a low-level price expectation set at around 37,000 points.
The overall recommendation based on technical indicators and analysts views is that the DJIA index might be perceived as a potential buy opportunity with the potential for numerous trading opportunities to appear based on changes in fundamental factors and international events.
Bottom Line: Is Dow 30 a Good Investment Now?
Dow 30 index is one of the most popular indices in the world. Moreover, the Dow 30 future movements are receive positive forecasts, and the index should thus maintain its upward trajectory. However, in the next period, the index may go through ups and downs based on changes in underlying factors.
The index is a viable long-term investment, while its short-term volatility level means that it might offer plenty of trading signals for traders. If you feel ready to invest in this index, ZFX is one of the best options for the reasons above.