If you open
the financial pages of many newspapers, you will find a number
of major market indices listed. Each of the indices tracks the
performance of a specific "basket" of stocks considered to represent
a particular market or sector of the U.S. stock market or the
economy. For example, the Dow Jones Industrial Average (DJIA)
is an index of 30 "blue chip" U.S. stocks of industrial companies
(excluding transportation and utility companies). The S&P
500 Composite Stock Price Index is an index of 500 stocks from
major industries of the U.S. economy. There are indices for almost
every conceivable sector of the economy and stock market. Many
investors are familiar with these indices through index funds
and exchange-traded funds whose investment objectives are to track
the performance of a particular index.
are general descriptions of some major market indices. You can
also find them described on their sponsors’ websites and in the
available information of the funds that track them (for example,
the prospectus for an S&P 500 Index fund will describe the
S&P 500 Composite Price Index). We have selected these indices
at random and many other indices exist that we do not describe
here. Finally, please note that the SEC does not regulate the
content of these indices.
Dow Jones Industrial Average (DJIA)
Dow Jones Industrial Average is an index of 30 "blue chip"
stocks of U.S. "industrial" companies. The Index includes substantial
industrial companies with a history of successful growth and wide
investor interest. The Index includes a wide range of companies—from
financial services companies, to computer companies, to retail
companies—but does not include any transportation or utility companies,
which are included in separate indices. The stocks included in
the DJIA are not changed often. Unlike many other indices, the
DJIA is not a "weighted" index (that is, the Index does not take
market capitalization into account).
NYSE Composite Index
The NYSE Composite
Index tracks the price movements of all common stocks listed on
New York Stock Exchange. The Index is "capitalization-weighted"
(that is, each stock’s weight in the Index is proportionate to
the stock’s market capitalization).
S&P 500 Composite Stock Price Index
500 Composite Stock Price Index is a capitalization-weighted
index of 500 stocks intended to be a representative sample of
leading companies in leading industries within the U.S. economy.
Stocks in the Index are chosen for market size (large-cap), liquidity,
and industry group representation.
Wilshire 5000 Total Market Index
5000 Total Market Index measures the performance of all
U.S. headquartered equity securities with readily available price
data. The Index is a capitalization-weighted Index. The Index
includes all of the stocks contained in the S&P 500 Composite
Stock Price Index. The Index is intended to measure the entire
U.S. stock market.
Russell 2000® Index
Russell 2000® Index is a capitalization-weighted index
designed to measure the performance of a market consisting of
the 2,000 smallest publicly traded U.S. companies (in terms of
market capitalization) that are included in the Russell 3000®
Index is a "modified capitalization-weighted" index designed to
track the performance of a market consisting of the 100 largest
and most actively traded non-financial domestic and international
securities listed on The Nasdaq Stock Market, based on market
capitalization. To be included in the Index, a stock must have
a minimum average daily trading volume of 100,000 shares. Generally,
companies on the Index also must have traded on Nasdaq, or been
listed on another major exchange, for at least two years.
You can also
find short descriptions of these and many other market indices
on the Nasdaq website.