Stock Indexes
What is the "Dow"?
The "Dow" is usually referring to the Dow Jones Industrial Average, which is an index of 30 stocks, or 30 companies. The index is put together by the editors of the Wall Street Journal (owned by Dow Jones and Company) who makes the index. The index was originally put together as a barometer for the overall growth of our economy. Its relevance has decreased as of late, as it only really represents 30 really industrial-type companies, and it doesn't represent so much more of our economy today.
What is the "S and P 500 Index"?
The S and P 500 Index is put together by Standard and Poor's, and it's an index of about 5 securities. What they're doing is to sit together as a group and say, "Can we create an index that's going to represent the large established companies across our entire market?" They tend to make changes to that S and P 500 Index on an annual basis, where they may add a few companies and take a few companies away, on that list of 5 companies.
What is the "FTSE Index"?
The FTSE - or, as it's pronounced, the footsie - Index, is an index of the London stock exchange. It's similar to what might be our SMP 500. The FTSE index is an index of a hundred securities. They're going to be their large companies, their growth companies. The FTSE index is a barometer of the large cap growth market in London.
What is the "EAFE Index"?
The EAFE Index, or as it's pronounced, the "ee-fee" Index, stands for Europe, Australia, and the Far East. And it's really an index of international stocks, companies, other than the United States. What's interesting about the index is it's about 25 percent represented by Japan and 25 percent represented by the UK, and the other 50 percent would be of developed countries in Europe and Asia.
What is the "NASDAQ Index"?
The NASDAQ Index is really the barometer of the NASDAQ exchange itself. What's interesting about the NASDAQ Index is, as with most indexes, it's a cap-weighted index. So, even though there might be 2 securities in the NASDAQ Index, its performance is really dominated by the top ten to twenty companies that are in that index.
