Good day for the Dow Jones Industrial Average, which ended the day on
Looking at the data for the last seven days, the Dow Jones Industrial Average is up 0.03%; however, it is still down 9.44% from a year ago. The Dow Jones Industrial Average is 16.64% below its high for the current year (36,799.65 points) and 2.64% above its year-to-date low (29,888.78 points).
What is a stock market index and what is it used for?
A stock market index is an indicator that shows how the price of a given set of assets changes, by taking data from various companies or sectors in one part of the market.
These indicators are mainly used by the stock exchanges of different countries and each one of them can be integrated by firms with different specificities such as having a similar market capitalization or belonging to the same type of industry, in addition, there are some indexes that only consider a handful of shares to determine their value or others that consider hundreds of shares.
Stock indices serve as an indicator of stock market sentiment, business confidence, the health of the national and global economy, and the performance of a company’s stock and equity investments. Generally, if investors lack confidence, stock prices tend to fall.
They also function to measure the performance of an asset manager and allow investors to compare return and risk; to measure the opportunities of a financial asset or to create portfolios.
These types of indicators began to be used at the end of the 19th century after the journalist
For example, the US Nasdaq index is composed of the 100 largest technology-related companies such as
How are they calculated and how to read them?
Each stock market index has its own method of calculation, but the main factor is the market capitalization of each firm in the index. This is calculated by multiplying the day’s value of the bond on the corresponding stock exchange by the total number of shares in the market.
Firms listed on the stock exchange are required to submit a balance sheet of their composition. Such a report must be reported every three or six months, as appropriate.
Reading a stock index also involves paying attention to its changes over time. New indices always start with a fixed value based on the prices of the securities on their inception date, but not all follow this method. As a result, it can be misleading.
If one index grows 500 points in one day, while another only adds 20 points, it may appear that the first index outperformed. But, if the former started the day at 30,000 points and the latter at 300, it can be assumed that, in percentage terms, the gains for the latter were more remarkable.
These are the main stock market indexes
Among the main stock market indexes in
On the other hand, the most important indices in
In the Latin American region, there is the IPC, which contains the 35 most powerful companies on the
Another is the Bovespa, made up of the 50 most important companies of the
Finally, there are other types of global stock market indexes such as the MSCI Latin America, which includes the 137 most important companies of
Similarly, there is the