April 11: Seven Stock Indexes you Should Know About

by David Jenyns on April 11, 2007

Dow Jones – ( DJIA ) The Dow Jones Industrial Average is the most often quoted stock index in the world. It is a broad based stock index, comprised of 30 companies and it is price weighted. It is the oldest continuing index in the world and the most often quoted. The Dow Jones industrial Average is expressed in points not numbers.

Nasdaq Composite Index – Nasdaq stands for ” National Association of Securities Dealers Automated Quotation System.” It was launched on Feb 5, 1971, with a base of 100.00, and is a broad based index of over 3000 securities. The NASDAQ Composite Index measures practically all NASDAQ stocks listed on The NASDAQ Stock Market. It is larger than most stock indexes and widely quoted and watched for just that reason. The NASDAQ Stock market was the first electronic stock market and most tech and computer firms can be found there, so investors often use Nasdaq to get an idea of how tech stocks are performing.

The NASDAQ Composite a market capitalization weighted Index. Which means the largest firms have the greatest impact on the index’s value?

NASDAQ was the world’s first electronic stock market and is the fastest growing stock market in the US.

Standard and Poor 500 – THE S&P 500 Is an index made up of 500 different stock. Each stock is selected for liquidity, size, and industry. The slandered and Poor 500 is weighted for market capitalization. Because of it’s diversity it is often seen as a benchmark of the overall market. It is the second most watched large -cap index after The DJIA. The S&P is often used in publications to compare other indexes, stock and mutual funds performance. It is not just a list of the biggest companies like the fortune 500, however. The company’s on the index are carefully selected by a committee to insure they are representative of various industries of the U.S. economy.

The Index is owned and maintained by Standard and Poor.

Japanese Nikkei 225 is the stock market index for the TSE (Tokyo Stock Exchange) it is the most watched index of Asian stocks. The Since 1971, it has been calculated by the Nihon Keizai Shimbun newspaper. It is a price-weighted average similar to the Dow Jones Industrial Average. The unit of expression is the Yen and the components are reviewed once a year.

FTSE 100 – The “footsie” is a share index of the 100 largest companies listed on the London Stock Exchange. It is seen as an indicator of the British economy and is the leading share index in Europe. The stocks in this index are determined quarterly. FTSE is an independent company owned the Financial Times and the London Stock Exchange. This index was first calculated in 1984.

Another Important stock market Index for Japan is the TOPIX. The Topix tracks 1645 companies on the Tokyo Stock Exchange or TSE. Topix is a free float weighted Index. Free float means it is weighed counting the shares that are available for trading.

CAC 40 – The CAC 40 is a French stock market index. It is a benchmark index for Euronext Paris. CAC stands for “Cotation Assistée en Continu” (Continuous Assisted Quotation), the index represents a capitalization-weighted measure of the 40 most significant values among the 100 highest market caps on the Paris Bourse. Its base value of 1,000 was set on 31 December 1987. As of 1 December 2003 the index has become a free float weighted index.

Even though CAC 40 is composed of “French” companies, about 45% of their shares are owned by foreign investors. These investors include American pension funds. The shares have been acquired mostly during the last 20 years as formerly state-owned companies became privatized. With so many foreign investors CAC 40 variations can have quite serious international repercussions. For instance, attempts at “boycotting French products”, by the American public may easily backfire, and lower the values of their own assets.

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