Share this article
A stock market index or indicator is a measure used to describe the performance of the stock market or a specific part of it, and also to make comparisons or benchmarks of investment returns. In general, an germany email list index uses a moderate average of stock prices, with larger companies having more influence in the calculation.
The stock indices were classified as follows:
Types of stock indexes
According to geographical origin:
National indices: are made up of assets from the same country.
International indices: are made up of assets from one or more foreign countries.
Global indices: made up of assets from all over the world.
According to the type of companies that comprise it:
Sector indexes: are made up of companies from a specific sector.
Intersectoral indexes: are integrated by all types of companies.
According to the type of assets:
Stock indexes: are made up of stocks.
Fixed income indices: are made up of bonds and obligations of all types.
Commodity indexes: such as gold, silver oil, etc.
Below, we will show you the most prominent stock indices in the world, which will allow you to understand how the stock market works.
Dow Jones Industrial Average (DJIA)
The Dow is the US stock index also known as the Dow Jones . Created by Charles Dow in 1896, it stands out for representing the weighted average of 30 North American companies , and is characterized by measuring market performance day by day. Among the most important companies in the index are names such as 3M, Cisco Systems, Coca-Cola, DuPont, JP Morgan Chase, McDonalds, Microsoft, Nike, Visa, Amazon , Alphabet , Walmart , Walt Disney , among others.
To calculate the Dow Jones Industrial Average, the prices of the 30 stocks in the index must be added together and then divided by the “ Dow divisor ,” which changes due to stock splits and other movements in the stock markets. The divisor is much smaller than one, so the value of the index is greater than the sum of the stock prices.
It is important to note that these companies and indicators change frequently. In the last 3 years, companies such as Visa, Nike, Apple and Goldman Sachs have been added to the index, for example.
An interesting fact: one of the 12 original members of the Dow has remained in the index since 1896 to this day, we are talking about General Electric .
S&P 500
In 1923, the first Standard & Poor's or S&P 500 stock index was created , standing out as the index with the largest market capitalization in the United States. This index is composed of 500 leading companies that capture approximately 80% of the total capitalization coverage of the available North American market.
For this reason, the S&P 500 is considered a good indicator of how the US markets are performing .
To belong to the S&P 500 , companies must be evaluated by the Committee called S&P Index , which is made up of analysts and economists from Standard & Poors, a group of professionals whose mission is to verify that companies meet the following criteria:
a) Must be a US company.
b) Market capitalization must be $5.3 billion or more.
c) The public quotation must consist of at least 50% of the outstanding shares.
d) Must have positive earnings reported in the most recent quarter as well as the four most recent quarters.
e) The shares must have an active market and must be traded at a reasonable price.
Meeting these criteria is no guarantee that a company's shares will join the S&P 500 : these are just the minimum requirements.
Some of the companies in the S&P 500 are Facebook, Google, Apple, Amazon, Microsoft, Netflix, United Continental, Johnson & Johnson, GE, Bank of America, Citigroup, JP Morgan, AT&T, Procter & Gamble, Walmart, Pfizer , among many others.
Nasdaq
Nasdaq was founded by the National Association of Securities Dealers Automated Quotation in 1971 and is considered the first or largest electronic stock market in the US.
In fact, Nasdaq corresponds to a virtual structure that was designed to buy and sell financial assets or shares through computers, being considered an index of the technology sector, which is affiliated with the NYSE, or New York Stock Exchange .
This stock index is made up of 3,800 companies and corporations . It also has a higher hourly trading volume than any other stock market in the world. It also has over 7,000 small and mid-cap stocks.
New technologies allow the world's stock exchanges to connect 24 hours a day, generating operations with investment funds that move from one country to another in a matter of seconds, betting on huge profits.
Online investing in stock indexes is currently very popular among both experienced and novice investors, as it can be started with little money . Another advantage of stock indexes is the ease of tracking and easy access to information.
