The difference between the US stock index, the Nasdaq, the Jones index and the S&P 500 index?

  We've heard of "Nasdaq" or "Dow". Even if you're not really into investing, you'll hear national news anchors reporting something like "The Nasdaq is up X points." But what does this actually mean and what exactly is the difference between the Nasdaq and the Dow? What about the S&P 500? First of all, don't confuse "Dow Jones & Company" with "Dow". The same goes for the Nasdaq exchange and the Nasdaq we're talking about here. We're not talking about companies or products here, they're an index (an index or indices), which is a way of tracking the average performance of a bunch of different stocks. The fundamental difference between the following four indices is the stocks they track. let's see.


  To get the full name, the Nasdaq Composite tracks about 3,300 different commodities listed on the Nasdaq exchange. The calculation is based on market capitalization and the last day's value is calculated at 4:16 pm each day. This is the index to check out if you're interested in technology, but it's also one of the most popular in the world due to its scope.


  "Dow" means the Dow Jones Industrial Average (DJIA). The index covers only 30 stocks, but they are all from major US companies. Think of household names like Goldman Sachs, Apple, Intel, and Nike. However, unlike the Nasdaq, the index is price-weighted. This means that volatility in higher-priced stocks will have a larger impact than volatility in lower-priced stocks, even if the relative percentages will decrease. Therefore, the Dow Jones Industrial Average does not necessarily reflect the overall stock market performance like the Nasdaq.

  S&P 500

  You can think of the S&P 500 (S&P 500) as the Dow Jones in many ways. It covers the 500 most traded stocks in the country, and it's really diversified -- not as tech-heavy as the Nasdaq. The main difference between the S&P 500 and the Dow is that the S&P is weighted by the Nasdaq-weighted market capitalization. This fact, combined with its greater coverage, means the S&P 500 is a reliable way to see how the market is doing overall.

  Of course, these aren't the only stock market indexes. Other well-known indexes include the Wilshire 5000, which is as close as you want to get a complete list of all actively traded stocks in the U.S., or the Russell 2000, a small-cap-only index.

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