Know Major Stock Indexes (Part I)
There are hundreds of ETFs and HOLDRS covering key industry benchmarks such as the various Standard & Poor Indexes, Russell Indexes and the Dow Jones Averages or other less well known narrow based sectors.
For example SPY tracks the Standard & Poors 500 Composite Index and is the largest of the ETFs. You should know the major indexes that are either key benchmarks or have ETFs tied to them.
Standard & Poor: Standard & Poor (S&P) has been providing independent and objective financial information, analysis and research for nearly 140 years. It is the financial services segment of the McGraw Hill companies.
It is also the provider of equity indexes and these S&P indexes are also used as the basis for wide variety of financial instruments such as Index Funds, Futures, Options and ETFs. Investors around the globe use S&P Indexes for investment performance measurement.
S&P 500 Composite is one of the most popular indexes in the global financial markets. Hundreds of companies around the world have licenses with the Standards & Poors for their index products. The influence and name recognition of S&P 500 is unparalleled. It is also used as a key benchmark for money manager performance.
The S&P 500 is a capitalization weighted index that tracks the performance of 500 large capitalization issues and each year thousands of money managers have the single minded goal of outperforming the S&P 500. S&P 500 represents more than 75% of the capitalization of the entire US Stock Market.
The stocks in the S&P 500 are determined by a nine member committee in accordance with the general guidelines. 30 years back most of the stocks in S&P 500 were from the Industrial Sector. Over the years, the complexion of S&P 500 has changed. By 1970s, six of the top companies were from the Oil Sector. In 2000s, technology composed about one third of the capitalization of the index.
The other Standard & Poors indexes are the S&P Midcap 400 Index. It measures the performance of the midsize companies of the US economy. It is based on 400 chosen domestic stocks and is also capitalization based.
S&P SmallCap 600 is also capitalization weighted index and is of interest to institutional and retail investors. The S&P SmallCap 600 Index consists of 600 smallcap domestic stocks and these stocks are chosen for market size and liquidity. There are also sub-indexes based on these S&P Indexes.
NASDAQ: You will often hear in the media that the Nasdaq market being up or down on a given day. NASDAQ Composite Index contains more than 4500+ companies. It represents a market capitalization of trillions of dollars in the US economy.
There is another Nasdaq Index called the Nasdaq-100. NASDAQ-100 is composed of the top 100 nonfinancial companies in the Nasdaq Stock Market like Microsoft etc. It is a modified capitalization weighted index. The QQQ is based on the Nasdaq-100 Index. - 23208
For example SPY tracks the Standard & Poors 500 Composite Index and is the largest of the ETFs. You should know the major indexes that are either key benchmarks or have ETFs tied to them.
Standard & Poor: Standard & Poor (S&P) has been providing independent and objective financial information, analysis and research for nearly 140 years. It is the financial services segment of the McGraw Hill companies.
It is also the provider of equity indexes and these S&P indexes are also used as the basis for wide variety of financial instruments such as Index Funds, Futures, Options and ETFs. Investors around the globe use S&P Indexes for investment performance measurement.
S&P 500 Composite is one of the most popular indexes in the global financial markets. Hundreds of companies around the world have licenses with the Standards & Poors for their index products. The influence and name recognition of S&P 500 is unparalleled. It is also used as a key benchmark for money manager performance.
The S&P 500 is a capitalization weighted index that tracks the performance of 500 large capitalization issues and each year thousands of money managers have the single minded goal of outperforming the S&P 500. S&P 500 represents more than 75% of the capitalization of the entire US Stock Market.
The stocks in the S&P 500 are determined by a nine member committee in accordance with the general guidelines. 30 years back most of the stocks in S&P 500 were from the Industrial Sector. Over the years, the complexion of S&P 500 has changed. By 1970s, six of the top companies were from the Oil Sector. In 2000s, technology composed about one third of the capitalization of the index.
The other Standard & Poors indexes are the S&P Midcap 400 Index. It measures the performance of the midsize companies of the US economy. It is based on 400 chosen domestic stocks and is also capitalization based.
S&P SmallCap 600 is also capitalization weighted index and is of interest to institutional and retail investors. The S&P SmallCap 600 Index consists of 600 smallcap domestic stocks and these stocks are chosen for market size and liquidity. There are also sub-indexes based on these S&P Indexes.
NASDAQ: You will often hear in the media that the Nasdaq market being up or down on a given day. NASDAQ Composite Index contains more than 4500+ companies. It represents a market capitalization of trillions of dollars in the US economy.
There is another Nasdaq Index called the Nasdaq-100. NASDAQ-100 is composed of the top 100 nonfinancial companies in the Nasdaq Stock Market like Microsoft etc. It is a modified capitalization weighted index. The QQQ is based on the Nasdaq-100 Index. - 23208
About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and forex. Know Candlestick Charting. Learn Forex Trading!
posted by X - Men @ 2:26 AM
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