A rebound day for the Russell 2000, which ended the day on
In terms of performance over the past seven days, the Russell 2000 is down 1.12%, so on a year-over-year basis it is still down 25.69%. The Russell 2000 is 24.68% below its high for the current year (2,272.56 points) and 3.75% above its low for the current year (1,649.84 points).
Stock market indexes… What for?
A stock market index is an indicator that shows how the price of a given set of assets is changing by compiling data on several companies or sectors in a given part of the market.
These indicators are mainly used by the stock exchanges of different countries and each one of them can be made up of companies with certain characteristics, 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 values would tend to fall.
They also function to measure the performance of an asset manager and allow investors to make 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 put together 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 index has its own method of calculation, but the main component is the market capitalization of each company in the index. This is calculated by multiplying the day’s value of the stock on the corresponding stock exchange by the total number of shares on the market.
Firms listed on the stock exchange are obliged to present a balance sheet of their composition. This report must be made public every three or six months, as appropriate.
Reading a stock market index also involves analyzing its changes over time. New indexes always start with a fixed value based on the prices of the securities on their inception date, but not all of them follow this method. As a result, it can be a source of misunderstanding.
If one index boosts by 500 points in one day, while another only adds 20, it might appear that the former outperformed. But, if the former started the day at 30,000 points and the latter at 300, it may follow that, in percentage terms, the gains for the latter were greater.
The main stock market indexes
Among the main stock market indexes in
On the other hand, the most important indexes in
In the Latin American region, there is the IPC, which contains the 35 most influential companies on the
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