![]() ![]() economy and includes many more companies, it's no wonder it's regarded as the single best gauge of large-cap U.S. Since the S&P 500 better represents the broader U.S. The top three or four stocks in the Dow Jones can account for a third of the index's movement in any given day. So, when a higher-price stock, say $200 per share, gains 1 percent, or $2, it will have a bigger impact on the index that when a $20 stock makes the same gains (1 percent would be only a 2o-cent move).įor example, a 1 percent gain in Visa or IBM would move the Dow Jones much more than similar gains in Johnson & Johnson or McDonald's. The top third of the S&P 500 consists of about 170 stocks.Īlternatively, the Dow's price weighting means a $1 move in any of its 30 stocks will move the index by an equal number of points. One advantage of doing this is that when a company decides to split its stock, it has no impact on the S&P 500 because its market cap remains the same. By calculating the index in this manner, it's a company's total capitalization, not its stock price (as in the Dow) that influences the index. That means each stock influences the index in proportion to its market valuation (the total value of all stock outstanding of a company). The S&P 500 index was originally created in 1957 and was the first U.S. The top five stocks in the S&P 500 index are Apple ( AAPL), Exxon Mobil ( XOM), Microsoft ( MSFT), Johnson & Johnson and General Electric ( GE). For example, they must have an unadjusted market cap of at least $5.3 billion, and they must have positive earnings when you add up the most recent four quarters. ![]() economy.Ĭompanies also must meet certain objective criteria. Again, the goal is to represent the broad U.S. companies also selected by S&P Dow Jones Indices. The high trading volumes and the leverage available have. The S&P 500 index, however, is a market-cap-weighted average and is far more inclusive. The DJIA is the worlds most widely followed stock index and the leading U.S. The top 10 stocks represented in the Dow as of the end of May 2014 are: Visa ( V), IBM ( IBM), Goldman Sachs ( GS), 3M ( MMM), Boeing ( BA), Chevron ( CVX), United Technologies ( UTC), Caterpillar ( CAT), Johnson & Johnson ( JNJ) and McDonald's ( MCD). ![]()
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