Understanding Major U.S. Stock Market Indexes
Three primary U.S. stock market indexes, which serve as benchmarks to gauge the overall performance of the stock market: Dow Jones Industrial Average (DJIA): Comprises 30 large, publicly owned companies across various industries. Price-weighted index, meaning companies with higher stock prices have more influence on the index's movement. Often viewed as a barometer for the broader U.S. economy. S&P 500 (Standard & Poor's 500): Includes 500 of the largest U.S. companies, providing a broad snapshot of the market. Market capitalization-weighted, so larger companies have a greater impact on the index's performance. Widely used by investors to assess the health of the U.S. stock market. Nasdaq Composite: Encompasses over 3,000 companies listed on the Nasdaq stock exchange. Heavily weighted towards technology and biotech firms. Known for its focus on growth-oriented and innovative companies. π‘ Key Takeaways for Investors Purpose of Indexes: These indexes help investors...