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What are the main market indices?

Popular indices

There are several market indices that traders should familiarise themselves with. The main ones are the DJIA, S&P500 and Nasdaq.

The Dow Jones Industrial Average (DJIA) is the most well-known and most frequently used indices in the world and includes the stocks of 30 of the largest and most influential companies in the United States. The DJIA represents about a quarter of the value of the entire US stock market. A change in the Dow represents changes in investors' expectations of the earnings and risks of the large companies included in the average. 

The S&P500 Index, more commonly known as the S&P 500, is a larger and more diverse index than the DJIA. Made up of 500 of the most widely traded stocks in the US, it represents around 80% of the total value of US stock markets. In general, the S&P 500 index gives a good indication of movement in the US marketplace as a whole.

The Nasdaq Composite Index (Nasdaq) is a market-capitalisation-weighted index of all stocks traded on the Nasdaq stock exchange. This index is especially known for its large portion of technology stocks and includes large and small firms but, unlike the Dow and the S&P 500, it also includes many speculative companies with small market capitalisations. As a result, its movement generally indicates the performance of the technology industry as well as investors' attitudes toward more speculative stocks.



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