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DJU Investing and Trading
Description - Dow Jones Utilities Index
History of the Dow Jones Utilities Index
The
Dow Jones Utility Average is the
youngest of the three Dow Jones Averages, having made its debut in January
1929. According to analysts who study the averages, a rise in utility
stock prices indicates investors anticipate falling interest rates. That's
because utilities are big borrowers and their profits are enhanced by
lower interest costs. Conversely, the utility average tends to decline
when investors expect rising interest rates. Because of this interest-rate
sensitivity, the utility average is regarded by some as a leading
indicator for the stock market as a whole.
Unlike the
industrial average, which has undergone more than 100 changes in its
nearly 104 years, the utility average has been relatively unaltered. Most
of the changes in recent years are the result of mergers and acquisitions.
Historical Dow
Jones Utilities Indicator
Originally,
the utility average started with 18 stocks, and six months later, on July
1, 1929, the number was increased to 20. The average was reduced to 15
stocks on June 2, 1938, and has remained at that level ever since.
For trivia
buffs, the original utility average included
American Telephone &
Telegraph Co., which was removed in 1938 and added to the Dow Jones
Industrial Average in March 1939, supplanting International Business
Machines Corp.
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