![]() ![]() In fact, the S&P 500's market weighting in financials is a big reason why it's been trailing the Dow. The S&P 500 tends to more closely follow the entire market. The Dow tends to be the blue-chip index and a measure of the biggest companies, but leans heavily toward what the stocks with the highest share prices are doing. Just these two characteristics can create three very different indexes. The Dow Jones Industrial Average, or DIJA, is defined as an average of the share prices of 30 major companies sold on U.S. ![]() And the Nasdaq composite includes only stocks that are traded on the Nasdaq market. The S&P 500 tends to be broader, hoping to have a bigger representation of companies from various sectors and industry groups. DJ US Total Stock Market Index includes all US equity securities with. The Dow tracks the value of 30 large companies which tend to be blue-chip firms that are household names. Below are detailed comparisons of the methodologies used by leading benchmark. Another key aspect that determines the value of indexes is the type of companies that are included. That means the companies with the greatest total market value hold the most sway in the Nasdaq. DOW JONES INDUSTRIAL AVERAGE COMPARE FREEThe Nasdaq composite index, lastly, is weighted based on market value. At Yahoo Finance, you get free stock quotes, up-to-date news, portfolio management resources, international market data, social interaction and mortgage rates that help you manage your financial life. Large companies that have big slices of their company held by a founding family, and the shares don't trade in the public's hands, don't count as much in the value of the S&P 500 index. That means the companies with the greatest value of shares available to be traded are given the largest weighting in the index. The Standard & Poor's 500 index is weighted by market float of shares. That means that IBM, trading for nearly $200 a share, has a much greater weighting than Bank of America, which trades for less than $10 a share. The Dow Jones industrial average gives greater weight to stocks with the highest per-share price. And the differences can be big between indexes. The value of a market measure is the result of a mathematical calculation. The Dow Jones Industrial Average (DJIA) and the Standard & Poors 500 Index (S&P 500) are two of the most widely followed American stock market indexes. ![]()
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