🐵 Dow vs. S&P500 vs. Nasdaq
“the dow closed 641.47 points higher, s&p500 closed flat, the nasdaq is in a sell-off…”
why in the world do we need three different indices to represent the stock market?!
🏭 Dow Jones Industrial Average (“the Dow” or “DJIA”)
30 large cap, blue chip stocks trading on both the NYSE (New York Stock Exchange) and Nasdaq
of the three indices, the Dow is often considered the most favorable proxy for the overall health of the economy
reason being, these companies are 30 of the largest (not always the top 30 largest) and economy-leading corporations that are sourced from multiple industries spanning the general economy
notable names are: 3M, American Express, Apple, Coca-Cola, Goldman Sachs, IBM, McDonald's, Nike, Visa, Walmart, Walt Disney, and 19 others…
🧳 Standard & Poor’s 500 Index (“S&P 500” or “SPX”)
this one’s the most popular index to gauge the overall health of the US stock market
one cool thing about SPX is that it’s weighted by market capitalization weighted
in other words, of the 500 companies, Tesla’s shares plunging that day would have a much more negative effect on the S&P 500 index than, say, Hasbro struggling that day
💻 National Association of Securities Dealers Automated Quotations (“Nasdaq”)
also market capitalization weighted, but this index represents 3700(!) stocks, particularly those that are traded on the Nasdaq stock exchange
a huge characteristic is more than half of these are in the technology sector
in fact, Apple alone accounts for, like, 10%+ of the index
there’s also other ones like Wilshire 5000 (“total market index”) and Russell 2000 (“small cap index”), but really, the three above is all you need to know to understand if the stock market’s going sideways, up, down, or very down like these days…;;
💡 just something cool
from time to time, i’ll be sharing cool statistics or trends i’ve been learning about recently
every new angle from which you’re able to look at the changing the world is a new edge you’ll have as an investor!
starting my second week of posting… please bear with me as i try to make this better in content, design, form, etc. this will be a learning experience for myself as well!
thank you for your patience, and always send me your questions or any suggestions you have with Ask a Wise Ape!