[Alberta's Child]

I can understand why Wal-Mart and McDonald's are on the list. Because the DOW is supposed to be an indicator of industrial activity, these stocks serve as reasonable indicators of industrial activity even if they themselves aren't the ones who are doing the manufacturing. This is the same rationale for why railroads were major components of the DOW back in the 19th century.

The financial services companies are the ones I don't get -- isn't there a separate DOW index for financial services?

[BenLurkin]

"Average:
An arithmetic mean return of selected stocks intended to represent the behavior of the market or some component of it. One good example is the widely quoted Dow Jones Industrial Average, which adds the current prices of the 30 DJIA stocks, and divides the results by a predetermined number, the divisor."

"Dow Jones Industrial Average
The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including, stocks that trade on the New York Stock Exchange. The Dow, as it is called, is a barometer of how shares of the largest U.S. companies are performing. There are hundreds of investment indexes around the world for stocks, bonds, currencies, and commodities."

SOURCE: Yahoo Finance

[Moonman62]

I can understand why Wal-Mart and McDonald's are on the list. Because the DOW is supposed to be an indicator of industrial activity,

The DOW is supposed to be the biggest companies that are representative of the overall economy. It's components are privately determined. The "Industrials" moniker is a holdover from many years ago, obviously. On that note, do you know why the hammer and sickle was on the Soviet flag?