Do you know the differences in stock indexes? What does “The stock market” mean?

You may have seen/heard on the news that “the market went up/down….” What does “the market” mean in the US? Typically they are referring to either the Dow Jones Industrial Index (aka “the Dow Jones”) or the Standard & Poors 500 index (aka “S&P 500”). The key difference? The Dow Jones tracks 30 “prominent” large companies stock prices from various US stock markets. The S&P 500 tracks the stock prices of the 500 largest companies listed on US stock markets. We feel the Dow Jones is quite an inadequate to track the US stock market performance. Not just because it only tracks 30 companies but also it’s inexact way to decide which companies are included. If you’d like to read more about the indexes, be sure to click the links.

Next time you hear news outlets mention how markets are doing: dig deeper. Find out what index they are referring to and listen whether they say how many points up/down or the percent the markets are up/down. Most outlets say points. Why? Because it’s more dramatic and “sells” the news. Pay attention. We do.

Your portfolio ready for a second opinion? Reach out and schedule your free session.

Make it a great week!

Your weekly market update is here.

Categories

Securities offered through LPL Financial, Member FINRA/SIPC. E2E Financial is another business name of Independent Advisor Alliance, LLC. All investment advice is offered through Independent Advisor Alliance LLC, a registered investment advisor. Independent Advisor Alliance is a separate entity from LPL Financial.

The information contained in this e-mail message is being transmitted to and is intended for the use of only the individual(s) to whom it is addressed. If the reader of this message is not the intended recipient, you are hereby advised that any dissemination, distribution or copying of this message is strictly prohibited. If you have received this message in error, please immediately delete.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. Investing involves risk including the possible loss of principal.

The S&P 500 is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. Indexes are unmanaged and cannot be invested in directly.

The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The Bloomberg U.S. Aggregate Index represents the U.S. investment-grade fixed-rate bond market. This index is unmanaged, and its results include reinvested dividends and/or distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or U.S. federal income taxes.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Market Index captures broad US equity coverage. The index includes 3,204 constituents across large, mid, small and micro capitalizations, about 99% of the US equity universe. Indexes are unmanaged and cannot be invested in directly.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.