Market indices are measures of performance of certain aspects or sectors of a stock market. The most important of these indices are the Dow Jones Industrial Average (DJIA), the Standard & Poor's 500 (S&P 500) and the NASDAQ Composite Index. They are generally based on the performance of selected U.S. stocks within their exchanges. The purpose of these indices is to assess the performance of certain sectors of the U.S. stock market or the economy as a whole.
The Dow Jones Industrial Average (DJIA) is the oldest U.S. market index. It covers all major areas of the US stock market, such as Industrial, retail, technology, healthcare and others. It is composed of 30 blue chip stocks that are among the largest in the U.S. economy.
The S&P 500 is a well-known provider of indices for the U.S. stock market. It comprises the largest 500 companies and is used by investors as benchmark for this market. It covers about 70% of the value of the U.S. stock market and comprises 380 industrial, 37utility, 73 financial and 10 transportation stocks. Although less popular than the DJIA, it is often used as a more accurate measure of performance of the U.S. economy.
The NASDAQ Composite Index (The National Association of Securities Dealers Automated Quotation) includes a wide range of companies and is arguably the most followed index in the world. The recent surge in popularity for technological stocks has launched the NASDAQ into the spotlight. The Nasdaq-100 Index includes 100 of the largest non-financial domestic and international companies listed on the Nasdaq National Market tier of the Nasdaq Stock Market Inc. The Nasdaq-100 index includes major players in high technology, airlines, department stores, and internet related companies.