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September/October 2023

A Look at the Major Stock Indexes

Penang, Malaysia - 8 Dec 2021: Dow Jones Stock Market Crash. It is a price-weighted measurement stock market index of 30 prominent companies listed on stock exchanges in the United States.

There are approximately 5,000 indexes that represent the U.S. equity market. While you rely on these indexes as indicators of how the stock market is performing, you cannot invest in any index. Here’s an overview of the most widely used.

What Is an Index?
An index measures the performance of a group of stocks and provides a snapshot of what is happening across specific industries, businesses, and the U.S. economy as a whole. Indexes are weighted by factors such as price and market capitalization — the total value of a company’s outstanding stock shares.

Dow Jones Industrial Average (DJIA)® - The First Index
The DJIA is a price-weighted index of 30 of the largest U.S blue-chip companies trading on the New York Stock Exchange and the Nasdaq. A price-weighted index gives stocks with the highest prices the most weight. The index got its start in 1886, after Charles Dow, Edward Jones, and silent financial partner Charles Bergstresser founded their own news agency called The Wall Street Journal. It was during this time that Dow developed his index as a way to measure stock market performance. As the oldest index, the DJIA is considered a gauge of the broader U.S. economy.

S&P (Standard & Poor's) 500®
The S&P comprises 500 of the top companies in the U.S. and represents 80 percent of the total value of the U.S. stock market. Stocks are selected primarily based on market capitalization. The S&P 500 typically serves as an indicator of movement in the entire market.

The Nasdaq Composite Index®
The Nasdaq (National Association of Securities Dealers Automated Quotations) is a market cap-weighted index of all stocks trading on the Nasdaq stock exchange. The index is heavily weighted in the tech sector and includes stocks in software, biotech and semiconductor industries, among others.

A Few More
The Wilshire 500® — often called the “total stock market index” — includes all publicly traded companies based in the U.S.

The Russell 2000® is an index of 2,000 small-cap stocks.

The S&P Midcap 400®, Russell Midcap®, and Wilshire U.S. Midcap Index® represent the midcap market.


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