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What’s the Difference Between the Dow, S&P 500, and Nasdaq?

What's the Difference Between the Dow, S&P 500, and Nasdaq?

What’s the Difference Between the Dow, S&P 500, and Nasdaq?

When stock market pundits talk about market outlook and performance, they’ll often look to the movement of three benchmark indices: the S&P 500, The Dow Jones Industrial Average, or the Nasdaq.

In this infographic, the key differences between these are outlined.

The Dow Jones Industrial Average is the oldest of the three, dating back to 1896, and tracks the movement of 30 large, public US companies. Today, the index is not really as “industrial” as the name entails. Many of the companies included in the index such as Goldman Sachs, Visa, or McDonald’s focus their business in other categories such as finance or consumer goods.

The S&P 500 is a stock market index composed of 500 large companies having common stock listed on the New York Stock Exchange (NYSE) or Nasdaq. Founded in 1923, it is now considered one of the best overall indicators of the US stock market.

The Nasdaq Composite is based on the 3000+ equities traded on the Nasdaq exchange. Founded in 1971, the index is closely followed for its representation of technology and high-growth companies.

Original graphic from: Tim Sykes

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  • Paul Barron

    You missed a great opportunity to show why the Dow Jones Industrial Average is very different and far less reliable as a reference than either the S&P500 or the Nasdaq indices. As an average of prices as opposed to a calculation of overall index market capitalization, the DJIA is prone to all sorts of eccentricities that multiply over time as they try to account for the splits and changes of its constituents. Your graphical representation of the calculations make them seem very similar, each with a divisor adjustment. They are not.

    It’s the longtime familiarity of the Dow Jones brand name that keeps this throwback alive. Responsible media should stop referring to it. The S&P500 provides a much better picture of market history and movement.

    Instead of going on at length to explain the DJIA problem, there are many references on the internet that do a good job. Try this one: http://www.rationalwalk.com/?p=146

    That being said, I appreciate and enjoy the daily infographics. Keep up the good work.

  • sportplayer

    Good Job Jeff……. !!! simple, real, clear, to the point, explanatory on the math…. Vis-Cap is a star*

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