Numbers #8: Measuring the Markets

There are many “models” used to measure the pulse of the United States stock market. Below are some of them. There are over 6,000 stocks traded over the New York stock exchange (NYSE). Here’s a laundry list of some of the U.S. stock markets indices. Each index contains a different “sampling” of stocks, however, any one stock can be listed in more than one index “basket”, e.g. Apple is traded on the NASDAQ market and is also included on the Dow Jones Industrial Index of 30 stocks. To be clear, the NASDAQ is a stock trading market place and the Dow Jones Industrial Average is a listing of 30 stocks.

New York Stock Exchange (NYSE)
“A stock exchange based in New York City, which is considered the largest equities-based exchange in the world based on total market capitalization of its listed securities. Formerly run as a private organization, the NYSE became a public entity in 2005 following the acquisition of electronic trading exchange Archipelago. The parent company of the New York Stock Exchange is now called NYSE Euronext, following a merger with the European exchange in 2007.”
Read more: New York Stock Exchange (NYSE) Definition | Investopedia

“A global electronic marketplace for buying and selling securities, as well as the benchmark index for U.S. technology stocks. Nasdaq was created by the National Association of Securities Dealers (NASD) to enable investors to trade securities on a computerized, speedy and transparent system, and commenced operations on February 8, 1971. The term “Nasdaq” is also used to refer to the Nasdaq Composite, an index of more than 3,000 stocks listed on the Nasdaq exchange that includes the world’s foremost technology and biotech giants such as Apple, Google, Microsoft, Oracle, Amazon, Intel and Amgen.” Read more: Nasdaq Definition | Investopedia

Dow Jones Industrial Average (DJIA)
“The DJIA is a price-weighted index, which means that the sum of the component stock prices is divided by a divisor. Instead of dividing by the number of stocks in the average, as is done in an arithmetic average, the Dow divisor is used. The purpose of this divisor, which is continually adjusted, is to smooth out the effects of stock splits and dividends. The result is that the DJIA is affected only by changes in the stock prices, so stocks with a higher share price have a larger impact on the Dow’s movements.

For example, if the DJIA rose by 50 points, it means that the cost of purchasing the 30 stocks in the index was $50 higher than the cost of purchasing those same 30 stocks yesterday, taking into account stock splits and dividends. In other words, those stocks are more valuable today than they were the previous day. Over time, the DJIA can be used as a benchmark for the economy.” Read more: What does the Dow Jones Industrial Average measure? | Investopedia

Dow Jones Utilities Index
“The Dow Jones Utility Average is a price-weighted average of 15 utility stocks traded in the United States. The DJUA was started back in 1929.” Read more: Dow Jones Utility Average (DJUA) Definition | Investopedia

Value Line Index
“A stock index containing approximately 1,675 companies from the NYSE, American Stock Exchange, Nasdaq and over-the-counter market. The Value Line Index has two forms: The Value Line Geometric Composite Index (the original equally-weighted index) and the Value Line Arithmetic Composite Index (an index which mirrors changes if a portfolio held equal amounts of stock.) These indexes are typically published in the Value Line Investment Survey, created by Arnold Bernhard, the founder and CEO of Value Line Inc.” Read more: Value Line Index Definition | Investopedia

S&P Small Cap Index
“An index of small-cap stocks managed by Standard and Poor’s. The S&P 600 SmallCap Index covers a broad range of small cap stocks in the United States. The index is weighted according to market capitalization and covers about 3-4% of the total market for equities in the United States.” Read more: S&P 600 Definition | Investopedia

S&P MidCap Index
“This Standard & Poor’s index serves as a barometer for the U.S. mid-cap equities sector and is the most widely followed mid-cap index in existence. To be included in the index, a stock must have a total market capitalization that ranges from roughly $750 million to $3 billion dollars. Stocks in this index represent household names from all major industries including energy, technology, healthcare, financial and manufacturing.” Read more: S&P MidCap 400 Index Definition | Investopedia

Russell 2000 Index
“An index measuring the performance approximately 2,000 small-cap companies in the Russell 3000 Index, which is made up of 3,000 of the biggest U.S. stocks. The Russell 2000 serves as a benchmark for small-cap stocks in the United States.” Read more: Russell 2000 Index Definition | Investopedia

Dow Jones Transportation Index (DJTA)
“A price-weighted average of 20 transportation stocks traded in the United States. The Dow Jones Transportation Average (DJTA) is the oldest U.S. stock index, compiled in 1884 by Charles Dow, co-founder of Dow Jones & Company. The index initially consisted of nine railroad companies – a testament to their dominance of the U.S. transportation sector in the late 19th and early 20th centuries – and two non-railroad companies. In addition to railroads, the index now includes airlines, trucking, marine transportation, delivery services and logistics companies.”
Read more: Dow Jones Transportation Average (DJTA) Definition | Investopedia

Of further interest: By the Numbers #3: Those Naughty Market Indices, They Move Up and Down!


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