Start of the day without changes for the S&P 500which begins on Thursday, January 12 with a variation of the 0.14%until the 3,964.10 points, after opening. Compared to previous days, the S&P 500 slows down with the streak of market prices of the last two days.
Taking into account the last seven days, the S&P 500 marks an increase in 4.1%; On the other hand, in year-on-year terms, it still maintains a decrease in 15.89%. The S&P 500 a 0.14% below its maximum this year (3,969.61 points) and a 4.1% above its minimum price for the current year (3,808.10 points).
Stock indices… What for?
a stock index It is an indicator that shows how the price of a certain set of assets changesfor which you need to have data from various companies or sectors of a fragment of the market.
These indicators are used mainly by the stock markets of the countries and each of them can be integrated by firms with specific characteristics such as having a similar market capitalization or belonging to the same type of industry, there are also some indices that only take into account a handful of shares to determine their value or others that consider hundreds of shares.
Stock indices serve as indicator of confidence in the stock market, business confidence, the health of the national and global economy and the performance of investments in shares and shares of an entity. If investors are not confident, share prices tend to fall.
They also work to measure the performance of an asset manager and allow a comparison between profitability and risk; measure the opportunities of a financial asset or create portfolios.
These types of indicators began to be used at the end of the 19th century after the journalist Charles H. Dow. carefully observed how the shares of the companies tended to rise or fall together in price, so he created two indices: one that contained the 20 most important railway companies (since it was the most important industry at the time), as well as 12 shares of other types of businesses
Today in our economy there are various indices and They can be grouped according to their location, sectors, company size or even the type of assetFor example, the US Nasdaq index is made up of the 100 largest companies mostly related to technology such as Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Facebook (FB), Alphabet (GOOG), Tesla (TSLA ), Nvidia (NVDA), PayPal (PYPL), Comcast (CMCSA), Adobe (ADBE).
How to read an index?
Each stock index has its own calculation method, but the main factor is the market capitalization of each firm that integrates it. This is obtained by multiplying the daily value of the share in the corresponding stock market by the total number of shares that are in the market.
Publicly listed companies are required to present a balance of its composition. Said report must be delivered every three or six months, as appropriate.
Reading a stock index also involves taking into account its changes over time. Current indices always start with a fixed value based on security prices on their start date, but not everyone follows this method. Therefore, it can lead to inaccuracies.
If one index boosts by 500 points in a day, while another only adds 20, it might appear that the former outperformed. However, if the first started the day at 30,000 points and the other at 300, it can be derived that, in percentage terms, the gains for the second were higher.
These are the main stock indices
Between the major US stock indices is the Dow Jones Industrial Average, better known as Dow Jones, made up of 30 companies. Likewise, the S&P 500, which includes 500 of the largest companies on the New York Stock Exchange. Finally, it is necessary to mention the Nasdaq 100which brings together 100 of the largest non-financial firms.
On the other hand, the most important indices of Europe are the eurostoxx 50, which covers the 50 largest companies in the euro area. Also, the DAX 30, the main German index containing the most prominent companies on the Frankfurt Stock Exchange; the FTSE 100 from the London Stock Exchange; the ACC 40 from the Paris Stock Exchange; and the IBEX 35from the Spanish stock market.
In Asiawe have the nikkei 225, made up of the 225 largest companies on the Tokyo Stock Exchange. Also, the SSE Composite Index, which can be considered the most solid in China, made up of the most relevant companies on the Shanghai Stock Exchange. The same role played by the Hang Seung Index in Hong Kong and the KOSPI in South Korea.
Talking about the latin american regionyou have the CPIwhich contains the 35 most outstanding firms of the Mexican Stock Exchange (BMV). At least a third of them are owned by tycoon Carlos Slim.
Another is the Bovespa, made up of the 50 most important companies on the Sao Paulo Stock Exchange; the Merval from Argentina; the IPSA From Chile; the MSCI COLCAP from Colombia; the IBC de Caracas, made up of 6 companies from Venezuela.
Finally, there are other types of global stock market indices such as the MSCI Latin Americawhich includes the 137 most important companies in Brazil, Chile, Colombia, Mexico and Peru.
Similarly, there is MSCI World, which includes 1,600 companies from 23 developed countries; the MSCI Emerging Markets, made up of more than 800 companies from developing countries; and the S&P Global 100made up of the 100 most powerful multinational firms on the entire planet.