DJIA, DJTA, DJUA, S&P500, NASDAQ, RUSSELL 2000, SOX, CRB, XAU
Dow Jones Industrial Average DJIA: The most familiar of all indexes, often just called "The DOW" and the overall proxy for the market. The "DOW" comprises the weighted stock price of the 30 Industrial companies, picked by the DOW Jones company. All 30 stocks are blue-chip large capitalization stocks. The largest is General Electric, GE, with a market cap of $329 billion. The DJIA started on May 26, 1896 at 40.94.
Dow Jones Transport Average DJTA: The DJTA consists of 20 transportation stocks, including major airlines and shipping companies and some railroads. Originally used as a leading indicator for the DJIA according to the DOW Theory, created by Charles Dow, founder of Dow Jones. Often used for confirmation of trends in the DJIA. The essential thought behind the theory is that if industry is booming, they will need to transport goods. Any weakness in the transport average is seen as a leading indicator of weakness in the Industrial
Average. With the service economy having grown significantly since the turn of the century, and the growth of the NASDAQ stocks, this relationship is less clear. However, many technical analysts watch the Transport Average closer for indicators.
Dow Jones Utility Average DJUA: There are 15 stocks in the DJUA, including most of the largest power and utility companies across the company. The DJUA serves as an indicator for the stock market's anticipation of interest rate changes. Utilities that pay fairly predictable dividends are viewed as income investments by many, and as such, react negatively to anticipated hikes in short term rates. Also used for confirmation of trends in the DJIA.
S&P 500: The Standard and Poors 500 Index is based upon market capitalizations. The current price of a stock is multiplied by the number of shares outstanding to determine market capitalization. The 500 highest market capitalizations are the stocks in the index. The price of each stock in the index is weighted by its percentage in the total overall index to determine current S&P500 index value. Microsoft (MSFT) is now the largest company in the index, at $373 billion in market capitalization, at approximately 1.4% of the overall capitalization. General Electric, GE, at $329 billion market cap is the second largest stock in the index, although it was the largest company for many, many years. The S&P500 represents about 70% of the total U.S. market capitalization.
NASDAQ Composite: The NASDAQ composite index comprises all of the nearly 5000 stocks on the NASDAQ exchange. Stock prices are weighted by market capitalization, as in the S&P500. The two largest stocks in the index are Microsoft (MSFT), $373 billion in market cap, and Intel (INTC), $225 billion in market cap. The NASDAQ 100 is a similar
index, but using only the top 100 companies on NASDAQ. Microsoft and Intel make up approximately 37% of the total Nasdaq 100.
Russel 2000 Index: The three principal Russell Indexes are the Russell 3000, Russell 2000, and Russell 1000 Indexes. All three are created and maintained by Frank Russell, Inc. The Russell 3000 Index covers the top 3000 companies by market capitalization and represents 98% of the total market capitalization in the U.S. The Russell 1000 measures the top 1000 companies in all markets, and as such, is similar to the S&P 500, only broader. The Russell 2000 is a way to measure the small-cap sector of the market. The Russell 2000 measures stocks 1001-3000 in market capitalization and represents the bottom 10% (by market capitalization) of the entire equity market.
Semiconductor Sector Index: SOX: A price-weighted composite index of 16 semiconductor chip manufacturers. This is a concentrated look at the technology sector, excluding software companies. Intel (INTC), Motorola (MOT), Linear Technology Group (LLTC), Lattice Semiconductor (LSCC) , and Texas Instruments (TXN) are the top five companies, and contribute almost 30% of the value of the index. Calculated by, and options traded on, the Philadelphia Exchange. The SOX index is sometimes viewed as an overall proxy for the technology sector.
Commodity Research Board Index: CRB: An inflation indicator, published by the Commodity Research Board. It is a compilation of commodity prices, put together from prices on the Commodity Exchange Center. Generally differs from the inflation reported by the Consumer Price Index and Producer Price Indexes put out by the government because the
CRB inflation index focuses only on commodities, and does not include items such as housing cost. As the only indicator available on a daily basis, it is of more interest to traders than the CPI or PPI.
Gold/Silver Sector Index: XAU: Precious Metals sector index consisting of 11 gold and mining stocks. Calculated by and options trade on the Philadelphia Exchange. Barrick Gold (ABX), Newmont Mining (NEM), and Placer Dome (PDG) dominate the index at nearly 75% of the total index. |
