Adverse day for the Russell 2000, which closed the day on
Over the past seven days, the Russell 2000 is up 3.3%; but on a year-over-year basis it is still down 19.09%. The Russell 2000 is 21.9% below its year-to-date high (2,272.56 points) and 3.3% above its year-to-date low (1,718.14 points).
What is a stock market index and what is it used for?
A stock market index is an indicator that measures how the price of a given set of assets evolves, and therefore requires data from various companies or sectors of a fragment of the market.
These indicators are mainly used by the stock exchanges of different countries and each one of them can be integrated by companies with different specificities such as having a similar stock market capitalization or belonging to the same type of business, likewise, there are some indexes that only take into account a handful of shares to determine their value or others that consider hundreds of shares.
Stock market indices serve as an indicator of confidence in the stock market, business confidence, the health of the national and global economy, and the performance of an entity’s 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 a comparison between profitability 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
Today there are several indexes and they can be agglomerated according to their geographical location, sectors, size of the companies or even the type of asset, for example, the US Nasdaq index is composed of the 100 largest companies largely related to technologies 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 obtained by multiplying the day’s value of the bond on the corresponding stock exchange by the total number of shares that are on the market.
Companies listed on the stock exchange are obliged to present a balance sheet of their composition. Such a report must be disclosed every three or six months, as the case may be.
Reading a stock market index also requires examining its changes over time. Current indexes always start with a fixed value based on the prices of the securities at their inception date, but not all follow this method. As a result, it can be misleading.
If one index adds 500 points in one day, while another only adds 20, it might appear that the former had a better return. However, if the former started the day at 30,000 points and the latter at 300, it can be seen that, in percentage terms, the gains for the latter were larger.
What are the main stock market indexes?
Among the main
On the other hand, the most important indexes in
Another is the Bovespa, made up of the 50 most important companies of the
There are also other types of global stock market indexes such as the MSCI Latin America, which includes the 137 most important companies in
Similarly, there is the