1. Summary
  2. Overview of Nasdaq Composite vs. S&P 500 vs Dow Jones
  3. Nasdaq Composite 


You must have surely heard about the Dow Jones Industrial Average (DJIA, or Dow) If you follow fiscal news. All three Index are considered measures of request performance on any given day. They’re also the base for numerous investment products that are modeled on their diurnal price movements.  The fiscal slang notwithstanding, it can be delicate, indeed confusing, to distinguish between the Index and products grounded on their performance. Read on to find out further about the differences among the three Index and how you can predicate your investment opinions grounded on their performance and request conditions.

  • The Nasdaq Composite, the S&P 500, and the Dow Jones Industrial Average (DJIA, or Dow) are three Index that is used to measure request performance. 
  • The Nasdaq Composite and the S&P 500 cover more sectors and further stocks in their portfolio, while the Dow is a blue-chip Index for 30 stocks.
  • The Nasdaq Composite and the S&P 500 assign weightings grounded on request capitalizations, while the Dow assigns weightings grounded on price. 
  • Depending on request conditions and the state of the frugality, each Index produces different earnings or losses. For illustration, a rising request may produce further earnings in the S&P 500 than in the Dow.  

Overview of Nasdaq Composite vs. S&P 500 vs Dow Jones

There are three main points of difference between the Nasdaq Composite, the S&P 500, and the Dow. The first one relates to their content macrocosm and the sectors that are part of the Index. The Nasdaq Composite and the S&P 500 cover further companies in different sectors than the Dow does. The alternate difference is their system of assigning weights to individual companies in their Index. The Nasdaq Composite and the S&P 500 weigh their ingredients grounded on request capitalizations (request caps), while the DJIA uses each constituent stock’s price to determine its weight in the Index.  The final difference is the criteria used to select ingredients of the separate Index. The Dow is more value-acquainted and uses a blend of quantitative and qualitative factors to determine whether a given stock should be included in its Index compared to the other two.  

Nasdaq Composite 

Launched in 1971, the Nasdaq Composite Index had an original value of 100 and includes nearly all companies listed on the Nasdaq stock exchange. One of the criteria for addition to the Index is a listing on the exchange.  The Nasdaq Composite has more than 3,000 stocks as ingredients and is a capitalization- ladened Index, meaning that it assigns weightings grounded on request caps of the separate companies. The compound’s performance reflects that of the exchange, which in turn is reflective of the performance of the technology sector. This is because the sector makes up roughly 50 of the overall composition of the Index. The top 10 companies tracked by the Index were technology titans and reckoned for 46 of the overall weight of the Index, according to September 2021 exploration.

Dow Jones Industrial Average (DJIA) 

The Dow Jones Industrial Average (DJIA) was established in 1896 with 12 members and is the oldest of the three Index. With only 30 ingredients, the Dow as it’s popularly called — also has the smallest members. The Dow is a price- ladened, large-cap Index, meaning that its overall value is determined by the diurnal stock price of its ingredients.  Therefore, a stock with a high price will have a disproportionately big impact on the Dow’s value. The Dow is considered a blue-chip Index because it tracks the performance of crucial companies that are ménage names and are supposed to comprise a subset of American frugality.

S&P 500

Like the Nasdaq Composite, the S&P 500 is a request cap-ladened Index of large-cap stocks. It has 500 ingredients that represent a different set of companies from multiple diligence. In 1999, the S&P and MSCI developed the Global Assiduity Bracket Standard, a global bracket system of companies, and created 11 sectors and 69 diligence that are represented in the Index. The S&P 500 is considered a better reflection of the request’s performance across all sectors compared to the Nasdaq Composite and the Dow. The strike to having further sectors included in the Index is that the S&P 500 tends to be more unpredictable than the Dow. therefore, its earnings may be advanced on days when the request does well and losses steeper when the request falls.