What are: DJIA, S&P 500 and NASDAQ?

When referring to stock market activity on any given day, television and print media will cite the latest reading from one or all of the three major stock indices.

But for the average investor, what do these indices mean?

Here is a quick summary.

The Dow Jones Industrial Average is a stock market index created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow.  It was founded in 1896, and is named after Dow and one of his business associates, statistician Edward Jones. It is an index that tracks how 30 large publicly-owned companies based in the United States have traded during a standard trading session in the stock market.  The Dow is among the most closely watched U.S. benchmark indices tracking stock market activity. Although Dow compiled the index to gauge the performance of the industrial sector within the American economy, the index's performance continues to be influenced by not only corporate and economic reports, but also by domestic and foreign political events that could potentially lead to economic gains or losses.

The S&P 500, or the Standard & Poor's 500, is a stock market index based on the common stock prices of the 500 top publicly traded American companies. It is one of the most commonly followed indices and many consider it the best representation of the market and a bellwether for the U.S. economy.

The NASDAQ Composite is a stock market index of over 3,000 common stocks and similar securities listed on the NASDAQ stock market.  It is highly followed in the U.S. as an indicator of the performance of stocks of technology and growth companies. Since both U.S. and non-U.S. companies are listed on the NASDAQ stock market, the index is not exclusively a U.S. index.

Derived from Multiple Sources

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

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