Stock Indices
A stock index is a statistical measure of price change in a stock market. It consists of a hypothetical portfolio of stocks representing a particular market, or a market segment. However, you cannot invest directly into a stock index.
The Dow Jones Industrial Average (DJI), the Standard & Poor's 500 (INX), the Nasdaq Composite Index (IXIC) are common benchmarks for the U.S. stock market.
Dow Jones Industrial Average (DJI)
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. It was invented by Charles Dow in 1896 and designed to serve as a proxy for the broader U.S. economy. The DJIA is the second-oldest stock market index in the United States of America; the first being the Dow Jones Transportation Average.
Standard & Poor's 500 Index (SPX)
The S&P 500 Index is a market capitalization-weighted index of the 500 biggest publicly listed businesses in the United States. It is not an accurate list of the top 500 businesses in the United States by market capitalization, since the index must meet other criteria. The index is generally considered as the most accurate barometer of large-cap United States stocks.
Outside of the top 10, the S&P does not presently offer a complete list of all 500 businesses on its website. Numerous technological and finance enterprises are among the S&P 500's top corporations.
The Nasdaq Composite Index (IXIC)
The Nasdaq Composite Index is a price-weighted index of over 2,500 common stocks traded on the Nasdaq stock exchange. American depositary receipts, common stocks, real estate investment trusts (REITs), and tracking stocks, as well as limited partnership interests, are included in the index. The index is comprised of all Nasdaq-listed equities that are not derivatives, preferred shares, funds, exchange-traded funds (ETFs), or debentures. The index is computed continuously during the trading day, with the final number published at 4:16 p.m. ET after the market closure at 4:00 p.m. ET. The Index is almost 50% technology, with consumer services, health care, and financials following closely behind.
