Question

Discuss the three most popular US stock indices. What are the main characteristics of each one? (DJIA, S&P 500, NASDAQ)

Answer 1

Three popular United States stock indices are Dow Jones industrial Average, S&P500, NASDAQ.

1. Dow Jones industrial Average (DJIA)-it is a stock market index that measures the performance of 30 large companies which are listed on stock exchanges in United States. It is not weighted by the market capitalisation and it does not use weighted average mean so it is more of a price weighted index.most of the experts does not considered it to be an adequate representation of overall United State stock market because it only includes 30 large cap companies. It has grown substantially as the United States economy has grown.

2. NASDAQ-Nasdaq composite is a stock market exchange, which is ranked second on the list of stock exchanges by market capitalisation of share traded.it has wide concentration of all such technology stocks which are present in the United States and which are the major chunk of United States economy like Apple, Amazon, Netflix, Microsoft etc. It has also returned substantially in the past many decades as United States economy has grown.

3 S&P 500-it is a United State Stock exchange index which measure the stock performance of 500 large companies that are listed on the stock exchange in United States.it is the most commonly Followed as it is the best representation of United States market as almost 500 companies are traded over there. This index is a capitalisation weighted index and performance of top 10 companies accounts for almost 20% of the performance of the index.