The Dow vs. the Nasdaq: A Summary
Due to the way individuals often use the phrases"the Dow" and"that the Nasdaq," in certain cases both these terms have become synonymous with "the industry " or even"the market." This can offer an impression of what these terms each actually refer to. While the Nasdaq and the Dow are indicators that investors can monitor, neither of those indicators indicates the current market or the market. They are snapshots of this marketplace which may provide a notion of the sector or the market is doing to investors.
- The two"the Dow" and the"the Nasdaq" refer to market indicators.
- The Nasdaq also identifies a market at which investors can buy and sell shares.
- Though it can be misleading according to the way the terms are often used, neither the Dow nor the Nasdaq describes "the marketplace" or even "the market."
- Investors can't exchange the Dow or the Nasdaq indicators since their representations of the operation of a group of shares in the kind of a mathematical common.
- But, investors can buy index funds--or exchange-traded funds (ETFs)--which monitor these indicators.
What Is The Difference Between The Dow And The Nasdaq?
"The Dow" really refers to the Dow Jones Industrial Average (DJIA), a significant indicator that lots of men and women listen to find an indication of how well the total stock market is doing. The DJIA isn't the same as Dow Jones and Company, a company that's owned by News Corp. and publishes the periodical known as The Wall Street Journal.
Rather, the indicator is one of several indicators owned by S&P Dow Jones Indices LLC, a joint enterprise of S&P Global (SPGI), CME Group Inc., and News Corp.
The DJIA is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange (NYSE) and the Nasdaq. The DJIA was invented by Charles Dow in 1896. It measures the performance of a number of the United States' largest, "blue chip" companies. The area of the title is the historical number of the component businesses of the index have anything related to the heavy sector
The Nasdaq is also a word that can refer to 2 distinct things: it is that the National Association of Securities Dealers Automated Quotations exchange, the initial digital exchange that enabled investors to purchase and sell inventory on a computerized, fast, and transparent platform, with no necessity for a physical trading floor. The next reference is to an indicator. When you hear folks state that the"that the Nasdaq is up now," they're speaking to the Nasdaq Composite Index, which, such as the DJIA, is a statistical measure of some part of the stock exchange.
Both the Nasdaq and the Dow are the average of a lot of figures based on the price movements of stocks that are certain, or terms which refer to an indicator. The Nasdaq contains everyone. Most are tech and internet-related, but there are still financial, customer, biotech, and industrial businesses too. Over 3,300 stocks are tracked by the Nasdaq. The DJIA consists mainly of firms located on the New York Stock Exchange, with just a few Nasdaq-listed stocks like Apple (AAPL), Intel (INTC), Cisco (CSCO), and Microsoft (MSFT).
Investopedia requires authors to utilize primary sources to support their job. These include government information, paper coverage, and interviews with industry specialists. Also, we mention studies from publishers that are respectable where appropriate. You may find out more about the criteria we follow in generating accurate, unbiased articles within our editorial coverage.
- S&P Dow Jones Indices. " Our Business --History." July 28, 2020, accessed.
- Encyclopedia Brittanica. " Dow Jones typical ." July 28, 2020, accessed.
- Library of Congress. " Wall Street and the Stock Exchanges: Historical Resources." July 28, 2020, accessed.
- Nasdaq. " IXIC." July 28, 2020, accessed.
Dow Jones Industrial Average (DJIA) Definition
The Dow Jones Industrial Average (DJIA) is a favorite stock exchange index that monitors 30 U.S. blue-chip stocks.
A broad-based index is intended to reflect the motion of the full marketplace; a single case of a broad-based index is the Dow Jones Industrial Average.
Many Popular U.S. Composite Indexes--A Refresher
A composite index is a statistical tool that groups together many distinct stocks or demographics. Composite indicators are supposed to offer a measure of the operation of a market sector or the industry.
The Dow 30 is an inventory index comprised of 30 big, publicly-traded U.S. businesses, that behaves as a sign of the marketplace.
The way to use the Dow Theory to Assess the industry
The Dow concept says that the industry is trending upward if one of its averages progress and can be accompanied by a similar advance in another average.
A part is one stock or business that's part of a bigger indicator like the S&P 500 or Dow Jones Industrial Average.