indicators used to measure and report value changes in representative stock groupings. Strictly speaking, an average is simply the arithmetic mean of a group of prices, whereas an index is an average expressed in relation to an earlier established base market value. (In practice, the distinction between indices and averages is not always clear; the AMEX Major Market Index is an average, for example.) Indices and averages may be broad based-comprised of many stocks representative of the overall market -or narrowly based, meaning they are composed of a smaller number of stocks reflecting a particular industry or market sector. Selected indices and averages are also used as the underlying value of stock index futures, index options, or options on index futures; these derivative instruments enable investors to hedge a position against general market movement at relatively low cost. An extensive number and variety of indices and averages exist. Among the best known and most widely used are
AMEX Composite Index (XAX): introduced in January 1997, it is a market capitalization-weighted, price appreciation index with a base level of 550 as of December 29, 1995. XAX reflects the aggregate market value of all of its components relative to their aggregate value on December 29, 1995. The index includes common stocks, or American Depositary Receipt of all AMEX-listed companies, REITs, master limited partnerships, and closed-end investment funds. Each component's market value is determined by multiplying its price by the number of shares outstanding. The day-to-day price change in each issue is weighted by its market value at the start of the day as a percent of the total market value for all components. The level of the index is not altered by stock splits, stock dividends, trading halts, new listings, additional issuances, delistings, or suspensions. www.amex.com.
AMEX Major Market Index (XMI): American Stock Exchange's price-weighted average of 20 blue chip industrial stocks representative of major U.S. corporations; several of the stocks are components of the dow jones industrial average (DJIA). The index was established with a base value of 200.00 as of April 29, 1983. Futures on the XMI Index are traded on the Chicago Board Of Trade. Options on the index are traded on Amex, and are traded under license on Euronext. www.amex.com..
Dow Jones Industrial Average: price-weighted average of 30 actively traded blue chip stocks, it is the oldest and most-quoted market indicator, first published on May 26, 1896. The Dow is prepared and published by Dow Jones Indexes, a unit of Dow Jones & Co. The Dow's components, which were once entirely industrial companies, have shifted with market dynamics and now represent a range of industries, including telecommunications, technology, consumer services, and financials. The components generally represent 20%-25% of the market value of U.S. stocks. The Dow is calculated by adding the trading prices of the component stocks and using a divisor adjusted for stock dividends and splits. cash equivalent distributions equivalent to 10% or more of the closing prices of an issue, and substitutions and mergers. The average is quoted in points, not dollars. The Dow underlies a variety of investment products, inlcuding one of the largest U.S. exchange-traded funds, diamonds, which are are traded on the American Stock Exchange. Other averages similarly maintained by Dow Jones Indexes are the Dow Jones Transportation Average-20 stocks representative of the airline, trucking, railroad, and shipping businesses (see also dow theory); and the Dow Jones Utility Average-15 geographically representative gas and electric utilities. The combination of the three averages encompasses 65 stocks and is known as the Dow Jones Composite Average. www.djindexes.com.
Dow Jones STOXX Indices: STOXX Ltd. is a joint venture of Deutsche Boerse AG, Dow Jones & Company, and the SWX Group the development, maintenance, distribution, and marketing of the Dow Jones STOXX indices. The cornerstone of the STOXX success story are the DJ STOXX blue chip indices. The DJ STOXX 50 (covering the largest sector leaders in Europe), the DJ EURO STOXX 50 (covering the largest sector leaders in the Eurozone), the DJ STOXX EU Enlarged 15 (providing a representation of the largest companies in the ten new member states that joined the European Union in 2004) and the DJ STOXX NORDIC 30 (covering the largest sector leaders in the Nordic region).
The DJ STOXX blue chip indices are derived from the DJ STOXX 600 index (with the exception of the DJ STOXX EU Enlarged 15 Index), a broader market index that combines the DJ STOXX Large 200, Mid 200, and Small 200 size indices. The DJ STOXX 600 contains the 600 largest stocks of the DJ STOXX Total Market index. The DJ STOXX TMI and the DJ EURO STOXX TMI cover 95% of the free float market capitalization of the European and Eurozone markets and are further subdivided into Size and Style indices.
The DJ STOXX 600 is the European sub-index of the DJ STOXX Global 1800. The DJ STOXX Americas 600 and the DJ STOXX Asia/Pacific 600 are their complementary counterparts; in combination they create the DJ STOXX Global 1800. All three regional indices cover the largest stocks of the developed countries in their respective regions. Further regional subsets and sector indices of the DJ STOXX Global 1800 are also calculated. The DJ STOXX Global 1800 is directly derived from the DJ World Index, consisting of approximately 5,500 stocks and covering 95% of the world's free float market capitalization.
Dow Jones Titans Indices: blue chip indices representing various countries, regions, and sectors. The flagship index of the family, the Dow Jones Global Titans 50 Index, was created to reflect the globalization of international blue chip securities in the wake of mergers and the creation of mega-corporations. The components are large-cap companies with at least some of their operations outside of their domestic markets. Dow Jones Sector Titans Indices represent 18 global industries such as financial services, chemicals, health care, and technology. The Dow Jones Titans family also includes country and regional indices that track the biggest and most liquid stocks traded in individual countries and regions. Each index in the Dow Jones Titans family is contructed by selecting stocks from broad-based indices maintained by Dow Jones Indices. www.djindexes.com.
Dow Jones Wilshire 5000 is the broadest available measure of the U.S. stock market. It includes all stocks traded on the New York Stock Exchange, the American Stock Exchange, and Nasdaq with readily available prices. The index was created in the 1970s by Wilshire Associates and was originally called the Wilshire 5000. In 2004, Dow Jones Indices and Wilshire Associates teamed up to cobrand the index and create a float-adjusted version that reflects only those stock shares available to investors. Dow Jones and Wilshire also maintain a full complement of subindices representing various sectors and industries, investment styles (growth and value) and size segments (large-cap, mid-cap, small-cap, and micro-cap).
NASDAQ Composite Index: market value-weighted index that measures all domestic and non-U.S.-based securities-approximately 3,200 companies-listed on the NASDAQ Stock Market. The index was introduced on February 5, 1971, with a base value of 100. The market value-the last-sale price multiplied by total shares outstanding-is calculated through the trading day, and is related to the total value of the index. Each security in the Index is assigned to a NASDAQ Stock Market subindex: Bank, Biotechnology, Computer, Health Care, Industrial, Insurance, Other Finance, Transportation, and Telecommunications. Values for the subindices began in February 1971, except for Biotechnology, Computer, and Telecommunications, which started November 1, 1993, and Health Care that started on July 12, 2005. www.nasdaq.com.
NASDAQ-100 Index: a market capitalization weighted index representing the largest and non-financial domestic and international securities listed on The NASDAQ Stock Market. The index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade, and biotechnology. Financial companies, including investment companies, are not included. The index is calculated under a modified capitalization-weighted methodology. The index was introduced on January 31, 1985, with a base of 250. On January 1, 1994, the Nasdaq-100 base was reset by division of a factor of 2 to 125. To be eligible, a security must have a minimum average daily trading volume of 200,000 shares and be listed on NASDAQ Stock Market for at least two years among other criteria. Foreign securities must be eligible for listed options trading. A ranking review is performed annually in December.NASDAQ Stock Market- 100 futures and options on futures trade on the chicago mercantile exchange. The NASDAQ Stock Market-100 option trade on CBOE, AMEX ,and ISE, and is a European-style Option that can be exercised on its expiration date only. www.nasdaq.com.
The NYSE Composite Index (NYA): relaunched in January 2003 under a new methodology and recalculated to a base value of 5,000, outperformed all broad-based indices in 2004. Designed to measure the performance of all common stocks, ADRs, REITs, and tracking stocks listed on the NYSE, the index represents 77% of the total U.S. market capitalization and 64% of the total global market capitalization.
PSE/PCX 100 Index: price-weighted, broad-based index representing 100 listed and over-the-counter stocks from 15 different industries- including computer hardware, software, semiconductors, telecommunications, data storage and processing, electronics, and biotechnology. The index measures the performance of the technology sector of the U.S. equities market, and is considered the industry benchmark. It is used by mutual fund rating services and analysts to gauge the overall performance of the technology sector of the U.S. equities market. The Pacific Exchange has maintained the index since 1982. Options are traded on the Pacific Exchange. www.pacificex.com.
Russell Indices: float market capitalization-weighted U.S. equity indices published by Russell Investment Group of Tacoma, Washington. The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on market capitalization, representing about 99% of the investable U.S. equities market. The 1,000 highest-ranking stocks in this index comprise the Russell 1000® Index. The Russell 2000 Index consists of the 2,000 smallest companies in the Russell 3000 Index. The Russell Top 200® Index measures performance of the 200 largest companies in the Russell 1000, while the Russell 2500 Index measures performance of the 2,500 smallest companies in the Russell 3000 Index. Growth indices on the Russell Indices measure performance of the respective companies with higher price/book ratios and higher forecasted growth values. Value indices on the Russell Indices measure performance of those companies with lower price/book ratios and lower forecasted growth values. Futures and/or options on some of the indices or associated exchange-traded funds are traded on the Chicago Board Of Trade, Chicago Board Options Exchange, the New York Board of Trade, International Securities Exchange, eurex US, American Stock Exchange, CBOE futures exchange, chicago mercantile exchange, Pacific Exchange, and Philadelphia Stock Exchange (PHLX). www.russell.com.See also russell indices.
S&P 500 Index: widely regarded as the best single gauge of the U.S. equities market; commonly known as the Standard & Poor's 500 (or S&P 500). This world-renowned index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Although the S&P 500 focuses on the large-cap segment of the market, with more than 80% coverage of U.S. equities, it is also an ideal proxy for the total market. More than $4 trillion is benchmarked against the S&P 500 and more than $1 trillion is directly invested in the index. The selection of stocks, their relative weightings to reflect differences in the number of outstanding shares, and publication of the index itself are services of standard & poor's. Stocks in the index are chosen for market size, liquidity, and industry group representation. Like all S&P indices, the S&P 500 is classified according to the Global Industry Classification System (GICS), which consists of 10 sectors- Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Information Technology, Telecommunications Services, and Utilities. In terms of market capitalization, the largest sectors in the S&P 500 are Financials, Information Technology, and Health Care. The composition of the 500 stocks is continuously updated and the number of issues in each sector varies over time so that the index constantly reflects the sectoral makeup of the market and economy. Standard & Poor's also publishes several other important indices including the S&P MidCap 400, the S&P SmallCap 600, and the S&P 1500 Composite Index, which totals the S&P 500, 400, and 600 indices and which represent approximately 90% of the total market capitalization of stocks traded in the U.S. equity market. S&P also maintains more than 90 individual industry indices. www.indices.standardandpoors.com.
S&P Global 1200 Index: the first real-time, free-float weighted world index, covering 29 countries and approximately 70% of global market capitalization. It is comprised of seven regional indices: the S&P 500; S&P/TSX 60 (Canada); the S&P Latin America 40 (Mexico, Brazil, Argentina, Chile); the S&P/TOPIX 150 (Japan); the S&P Asia 50 (Hong Kong, Korea, Singapore, Taiwan); the S&P/ASX 50 (Australia) and the S&P Europe 350. The European index is divided into three subindices: the S&P Euro, covering the Euro zone markets; the S&P Euro Plus, adding Denmark, Norway, Sweden, and Switzerland; and the S&P United Kingdom. Constituents of the S&P Global 1200 are selected to ensure sectoral and country balance. Constituent weights are determined by a company's free-float market capitalization: corporate cross-holdings, government ownership, strategic holders, and foreign investment restrictions are removed. The component indices are maintained by an index committee consisting of Standard & Poor's worldwide staff, using the same index governance and maintenance principles used by the S&P 500. Standard & Poor's collaborates with the Toronto Stock Exchange the Tokyo Stock Exchange, and the Australian Stock Exchange on maintenance of the Canada, Japan, and Australia indices, respectively. Exchange-traded funds are available on the S&P 500, S&P Europe 350, S&P/TSX 60, S&P/ASX 50, and the S&P Latin America 40. Futures and options are traded on the S&P 500, the S&P/TSX 60, and the S&P/ASX 50. Like all S&P indices, the S&P Global 1200 is classified according to the Global Industry Classification System (GICS), which consists of 10 sectors- Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Information Technology, Telecommunications Services, and Utilities. In terms of market capitalization, the largest sectors in the S&P 500 are Financials, Information Technology, and Health Care. The largest, in terms of market capitalization, is Financials. Other top sectors represented are Consumer Discretionary, Health Care, and Information Technology. Among the smallest are Utilities, Materials, Telecommunications Services, and Energy. www.indices.standardandpoors.com.
Standard & Poor's 100 Index (OEX): market-capitalization weighted index of 100 major, blue chip stocks across diverse industry groups. The index is a sub-set of the S&P 500 and measures largecompany U.S. stock market performance. Options on the S&P 100 Index are listed on the Chicago Board Options Exchange. Its components are mainly NYSE industrials, with some transportation, utility, and financial stocks. www.indices.standardandpoors.com.
Value Line Composite Averages: equally weighted arithmetic and geometric averages of approximately 1700 NYSE, AMEX, and NASDAQ stocks tracked by the value line investment survey. The stocks cover more than 90 industries, the stock markets, and the economy. The averages use a base value of 100, established June 30, 1961; changes are expressed in index numbers rather than dollars and cents. Value Line also offers three sector indices: the Value Line Geometric Industrial Average, Value Line Geometric Rail Average, and Value Line Geometric Utilities Average. The Kansas City Board of Trade trades Value Line Stock Index futures and options. www.valueline.com.
Many indices and averages track the performance of stock markets around the world. The major indices and exchanges that offer them include:all ordinaries index; Athens Stock Exchange; Bolsa De Commercio De Santiago; bolsa de madrid; Bolsa Mexicana de Valores; BOVESPA; borsa italiana; Cac 40 Index; EAFE index; euronext; hang seng index; Johannesburg Stock Exchage; bursa malaysia; London Stock Exchange; Morgan Stanley Capital International indices; new zealand exchange limited; OMX; Oslo Stock Exchange; Singapore Exchange Limited; Stock Exchange of Thailand (SET); swx; Tokyo Stock Exchange; Tel-Aviv Stock Exchange; Toronto Stock Exchange (TSX) and Wiener Borse Ag.
