The Dow Jones Industrial Average is computed from the share price of the 30 largest and most widely held public companies in the United States and traded on the New York Stock Exchange (NYSE).

The Dow Jones Industrial Average also known as the Dow 30 and informally known as the Dow Jones or The Dow is one of a few American stock market indices. The Dow Jones was compiled to gauge the performance of the industrial sector of the American stock market and is the second oldest American-Market index, after the Dow Jones Transportation Average.

The “industrial” in its name is purely historical and since its creation many of the 30 companies that make-up the index have little or nothing to do with traditional heavy industry.

For a list of companies on the Dow Jones

Leading US shares have surged, boosted by a report that the US government might announce a new plan that would help tackle the financial crisis.

The leading Dow Jones Industrial Average added more than 400 points, or 3.86%, to 11,019.69, a rise of 560 points from its low of the day.

Treasury Secretary Henry Paulson was looking to create a repository for bad bank debt, CNBC reported.

World markets have been volatile in the wake of huge upheavals among banks.

Since the start of the week, Lehman Brothers has collapsed, the Federal Reserve has bailed out insurance giant AIG, Merrill Lynch has been acquired by Bank of America and in the UK, Lloyds TSB has acquired HBOS.

US investors were boosted on Thursday by the hope of a broad-reaching federal intervention that might lead to the creation of an entity to take on the bad debt that has hit finance firms.

Only a day earlier the Dow Jones index had fallen by more than 4%.

CNBC said that Mr Paulson was looking into setting up something akin to the Resolution Trust Corp, which was formed after savings and loans banks collapsed in the 1980s.

The past few days have seen a number of dramatic developments on financial markets. Thursday’s key events include:

– Central banks from the UK, US, Europe, Canada, Switzerland and Japan are releasing $180bn into their money markets. The move is the fourth such concerted effort since the onset of the credit crisis last year.
– The news helped to reduce the interest rate at which banks lend to each other – a key factor behind the problems in credit markets.
– Cautious investors are looking for safer places to put their money. The price of gold, regarded as a haven in troubled times, rose to $871.2 an ounce after recording its biggest one-day gain in history on Wednesday.
– Lloyds TSB released details of its £12.2bn takeover of HBOS. The deal values HBOS shares at 232p each and is expected to lead to cost savings of £1bn a year and could also result in significant job losses.
– Russia’s main stock exchange suspended trading for a second consecutive day as the government tried to halt a sharp fall in share prices and restore confidence in the economy.
– The UK’s Financial Services Authority has announced steps to restrict short-selling of shares while New York’s attorney general has launched a probe into short-selling.

Bush concern

Earlier on Thursday, European markets had been mixed.

The Paris Cac shed 1.06% to end at 3957.86 and London’s FTSE 100 ended 0.6% lower at 4880. In Frankfurt, the Dax closed 0.04% up, at 5863.42.

Bush seeks to reassure markets

US President George W Bush said he was closely monitoring the situation on financial markets and the recent actions taken by the Federal Reserve and other regulators were “necessary and important”.

“We will continue to act to strengthen and stabilise our financial markets and improve investor confidence,” he said.

Banks take action

Earlier on Thursday six of the world’s top central banks took steps to calm worried stock markets, releasing $180bn (£99bn) to lift the amount of credit available.

“The credit crunch is creating a new world order in banking and finance” Robert Peston, BBC business editor

While the move was viewed positively, there were concerns the impact would be short-lived.

“Markets know that central banks don’t own a magic bullet, otherwise they would have used it already,” Sean Callow, currency strategist at investment firm Westpac.

“And we’ve seen these sorts of steps before; it only addresses one of the symptoms of the underlying crisis.”

In Asia, Hong Kong ended flat at 17,632.5 after earlier falling by 7% as fears of more company failures gripped investors.

Tokyo’s Nikkei share index ended 2% lower. Share indexes in Shanghai, Taiwan and India fell by between 3 and 5%.

News reported by The BBC

Market turmoil after Lehman Brothers filed for bankruptcy has raised doubts over what the US central bank will do at its imminent rate-setting meeting.

Economists said the Federal Reserve might lower interest rates, having earlier expected them to stay on hold.

Markets worldwide slumped on Monday with the Dow Jones Industrial Average closing down more than 500 points.

Faced with the twin threats of high inflation and a slowdown, the bank kept interest rates on hold at 2% in August.

Lehman Brothers – the fourth largest US investment firm – filed for bankruptcy after failing to find a buyer at the weekend.

A main worry is that Lehman’s bankruptcy will make it even harder to gain access to credit – hitting both other large lenders but also small firms and US homebuyers.

“It puts a Fed rate cut back on the table” said Stuart Hoffman, lead economist at PNC Financial Services group.

A group of leading banks, including JP Morgan, Goldman Sachs and Citigroup, developed a $70bn (£38.9bn) pool that banks or brokerages can tap into to boost liquidity.

And the Federal Reserve took steps to improve access to emergency credit for struggling financial companies, by increasing the types of securities financial institutions could use to gain emergency funding.

Stocks falls

Lehman’s demise was not the only news creating market jitters on Monday, before which analysts had expected interest rates to remain on hold.

“This is the result of the mania for deregulation which began when Reagan was president” David Stowell, Portland, Oregon

Send us your commentsThe future of insurance giant AIG remained unsure, after reports that it had sought $40bn in emergency funding over the weekend from the government to shore up its finances.

Later on Monday the firm gained access to $20bn, thanks to New York State approval.

And Bank of America announced that it would buy Merrill Lynch in a $50bn deal.

Such uncertainty over the state of the markets and in particular key financial institutions prompted stocks worldwide to see sharp falls.

While the Dow Jones was down some 4% on Monday, the Standard & Poor’s 500 index shed 4.69% and the Nasdaq composite index ended 3.60% lower.

Leading European indexes had ended lower, including the UK’s FTSE 100 index which was 3.92% down.

News reported by The BBC

The number of homes sold in the US fell 15.5% in June compared with the same month last year, as the US housing market continued its slump.

Analysts said the figures from the National Association of Realtors (NAR) suggested the housing market had not yet found a bottom.

The NAR said forced sales such as foreclosures made up a third of sales.

The data raised fears about the health of the US economy and sent US shares sharply lower.

On Wall Street, the blue-chip Dow Jones industrial average slid 2.43% to end at 11,349 points.

Regional variations

The NAR said that a key reason for the decline in sales was a lack of first-time buyers.

The figures also showed regional variations with existing homes sales falling in the South, the Mid-west and North-east, but still rising in the West, where the population is growing the fastest.

Sales were down 2.6% on a month-to-month comparison.

The figures also showed that the median price of existing homes was $215,000 in June, down 6.1% from June 2007.

Other house price indexes have suggested that falls in major metropolitan areas may be closer to 15%.

Paul Ashworth, senior US economist at Capital Economics said that even when sales begin to recover, the excess supply of unsold homes sitting on the market will continue to put downward pressure on house prices for some time

“Most worryingly, the anecdotal evidence suggests that the only reason sales aren’t falling at a faster pace is down to the unprecedented surge in sales of foreclosed homes,” he said.

News reported by The BBC