Stock Market Indices

Paper Summary:

This paper examines three major American stock exchanges: the New York Stock Exchange, the American Stock Exchange and the Nasdaq. The paper points out that they collectively represent thousands of publicly traded corporations, mutual funds and other entities, all with different trading prices and market capitalizations. To simplify the complex task of identifying performance trends that can affect the markets and the U.S. economy, a series of indices have been designed to guage market performance. The paper holds that the four most commonly cited indices are the Dow Jones Industrial Average, the Standard & Poor's 500, the New York Stock Exchange Composite, and the Nasdaq 100. The paper concludes that, while each index has its relative strengths and weaknesses, together these indices perform a valuable role in helping both the general public and investment experts make sense of the American stock markets.

Outline:
The Dow Jones
S&P 500
NYSE Composite
Nasdaq 100
Conclusion

From the Paper:

"The New York Stock Exchange created the NYSE Composite in the mid-1960s and revamped it in 2003 in what it called an attempt to modernize it and make it more transparent (TSC Staff, 2003). This involved removing mutual funds, trusts and derivatives from the index, which pared down its total membership by about 700. NYSE claimed that, under its old composition, the NYSE Composite was double-counting some companies that were also held in these mutual funds and trusts (TSC Staff, 2003). As part of the changes introduced to the NYSE Composite, NYSE also reset its base value from 500 to 5,000. This type of change has been made before, as the index was founded with only a base value of 50. These changes have arguably not diminished the overall value of the NYSE Composite index. Because NYSE trades many of America's oldest and largest blue-chip companies, it remains the flagship exchange for the American stock markets. Because the NYSE Composite provides a way to measure the overall performance of this important exchange, it will remain a critical stock market index."

Sample of Sources Used:

• "Dow Jones Industrial Average" (2007). Dow Jones & Co. Web Site. Retrieved Dec. 4, 2007 from "http://www.djindexes.com/mdsidx/index.cfm?event=showAvgOverview&averageSelection=I."
• "Market indices," (No date). U.S. Securities and Exchange Commission Web site. Retrieved Dec. 4, 2007 from "http://www.sec.gov/answers/indices.htm."
• Motley Fool (No date). "Nasdaq 100 Index." The Motley Fool. Retrieved Dec. 3, 2007 from "http://www.fool.com/school/indices/Nasdaq.htm."
• "Nasdaq 100 Index," (No date). Nasdaq Web site. Retrieved Dec. 4, 2007 from "http://dynamic.Nasdaq.com/services/indexes/ViewIndexes/Nasdaq_100.aspx?sym bol=IXNDX."
• "NYSE Composite Index," (2007). New York Stock Exchange Web site. Retrieved Dec. 3, 2007 from "http://www.nyse.com/pdfs/composite_brochure.pdf."

More papers on Stock Market Indices:

• Essay # 52169 : "The Stock Market and the Economy"
• Essay # 89140 : "Walt Disney and Whole Foods Market"
• Essay # 14556 : "Internet Stocks"

APA Citation:

MLA Citation: