Start of the day without changes for the Dow Jones Industrial Averagewhich opens the session on Thursday, January 12 with a variation of the 0.11%until the 33,936.58 points, after the start of the opening session. Regarding past dates, the Dow Jones Industrial Average puts an end to two streak sessions.
In the last week, the Dow Jones Industrial Average accumulates a raise of 3.06%; However, in year-on-year terms, it still accumulates a drop in 6.39%. The Dow Jones Industrial Average a 0.11% below its maximum so far this year (33,973.01 points) and a 3.06% above its minimum valuation for the current year (32,930.08 points).
Stock indices… What for?
a stock index It is an indicator that measures how the price of a set of assets evolves.so it takes data from various companies or sectors of a fragment of the market.
These indicators are used mainly by the stock markets of various nations and each of them can be integrated by firms with specific characteristics such as having a similar market capitalization or belonging to the same business type, likewise, there are 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 stock investments and shares of an entity. If investors are not confident, share prices will tend to fall.
They also work to measure the performance of an asset manager and allow investors to make 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. To carefully analyze how the shares of companies tended to rise or fall together in price, he created two indices: one that contained the 20 largest railway companies (as it was the most important industry at the time), as well as 12 shares of other types of businesses
Currently there are various indices and They can partner based on their geographic location, industries, company size, or even asset classFor 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 is it calculated and how to read them?
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.
Companies listed on the stock exchange are required to present a balance of its composition. Said report must be made public every three or six months, as appropriate.
Reading a stock index also implies analyzing its evolution over time. New 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 failures.
If one index grows 500 points in one day, while another only gets 20, it might appear that the former performed better. But, if the former started the day at 30,000 points and the other at 300, you can see that, in percentage terms, the gains for the latter were considerable.
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 comes the Nasdaq 100which links 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 the asian continentthe main stock indices are the nikkei 225, made up of the 225 largest companies on the Tokyo Stock Exchange. There is also the SSE Composite Index, which appears as the main one in China, made up of the most relevant companies on the Shanghai Stock Exchange. Similarly, it is worth mentioning 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 powerful firms on the Mexican Stock Exchange (BMV). At least a third of them belong to the capital of 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.
Also, 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.