What Is the Dow Jones 65 Composite Average?
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What Is the Dow Jones 65 Composite Average?

3 Min.

The Dow Jones 65 Composite Average is a stock market index that consists of sixty-five highly influential American publicly traded companies. It includes all the stocks from the Dow Jones Industrial, Transportation, and Utility indexes. Similar to its sub-indices, the Dow 65 is a price-weighted index.

Basics

The Dow Jones 65 Composite Average is a dynamic index that includes 65 prominent publicly traded corporations across the financial market, industry, transportation, and utilities. It consists of 30 stocks from the Dow Jones Industrial Average (DJIA), 20 from the Dow Jones Transportation Average (DJTA), and 15 from the Dow Jones Utility Average (DJUA). One noteworthy characteristic shared with its constituent sub-indices is its price-weighted methodology. While the Dow 65 offers a more comprehensive insight than the DJIA by itself, it selectively omits several noteworthy technology and growth enterprises, which are conspicuously absent from either of the other two sub-indices.

Exploring the Dow Jones 65 Composite Average

The Dow Jones Industrial, Transportation, and Utility averages used to be a reliable indicator of the US economy when they were major contributors to economic output. However, the evolving landscape has seen sectors like technology, healthcare, and finance rise to prominence, now housing some of the globe's largest corporations.

While the DJIA has recently incorporated more contemporary firms like Microsoft, Apple, and Intel into its "industrial" average, most Dow Jones 65 constituents remain firmly rooted in traditional or traditional-style businesses. Consequently, their representation no longer mirrors a broad portrayal of economic performance.

All Dow Jones averages adhere to the price-weighted indexing methodology, where stocks with higher prices wield a more substantial impact on the average's trajectory than lower-priced counterparts, irrespective of a company's actual size. Within this framework, a stock's ascent from $110 to $120 holds more sway over the index than a stock progressing from $10 to $20, despite the latter demonstrating a higher percentage gain. The influence of higher-priced equities on the index's overall direction is magnified.

To compute the value of a basic price-weighted index, the sum of individual company share prices is tallied and then divided by the number of companies. Some indices adjust this divisor to ensure continuity amid stock splits or alterations to the index's constituent list. In stark contrast, most broad-market benchmarks employ market-capitalization weighting, exemplified by the Nasdaq 100 Index and the S&P 500 Index.

Key Companies in Dow Jones 65 Composite Average

The Dow Jones 65 Composite Average comprises numerous well-known entities representing a diverse spectrum of industries. Here are some notable companies from each of the three sectors:

  • Industrial sector: Boeing, Caterpillar, Exxon Mobil, Johnson & Johnson (J&J), United Technologies, Walt Disney
  • Transportation sector: American Airlines, Delta Airlines, Landstar System, Norfolk Southern, Southwest Airlines, United Parcel Service (UPS)
  • Utility sector: America Electric Power, American Water Works, Centerpoint Energy, Dominion Resources, Edison International, NextEra Energy

Conclusion

The Dow Jones 65 Composite Average is a market index of 65 influential American publicly traded companies, encompassing stocks from the Dow Jones Industrial, Transportation, and Utility indexes. It uses a price-weighted methodology, which means higher-priced stocks have more influence. The modern economy has seen technology, healthcare, and finance sectors rise, but the Dow Jones 65 still leans toward traditional businesses. The Dow Jones 65 Composite offers insights but may not fully reflect the influence of technology and non-traditional sectors in today's economy.

Dow Jones 65 Composite Average
Dow Jones Industrial Average (DJIA)
Dow Jones Transportation Average (DJTA)
Dow Jones Utility Average (DJUA)
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