Question

What is the "Dow Jones Industrial Average", and why do investors think it's important? What about the S&P 500? What about the NASDAQ 100?

Answer 1

1 . Dow Jones industrial average

Dow Jones Industrial Average is a market index named after Charles Dow. This index tracks the 30 largest companies of US. Thus, technically we can say that it tracks the movement of prices of large companies. Large cap companies are very big companies like coca cola.

Now, coming about why it is important, so it is considered to be very important by investors because this index represents about 25% of the stocks and thus helps in getting a snapshot or an overall picture of the entire economy's stock market.

2 . S&P 500

S&P stands for Standards & poor's which is the name of a market research form. S&P 500 is again a market index which tracks the stock prices of around 500 large US companies which are spread among various industries and sectors. It represents around 70% of all the stocks that are publicly traded.

NASDAQ 100

NASDAQ 100 is an index covering around 100 largest most actively traded US companies listed on NASDAQ stock exchange . It includes companies of various industrial background except financial industry . These non financial industry includes retail, health care, life sciences, manufacturing, tech companies etc.