Читать книгу Equity Markets, Valuation, and Analysis - H. Kent Baker - Страница 42

Many market indicators for the economy, including market indices, are available. A market index is a hypothetical portfolio of investment holdings representing a segment of the stock market. The change in the value of this portfolio can serve as an indicator of market movement. Calculating the index return involves summing the products of individual index component returns and weights.

Different index-weighting schemes are based on factors such as market capitalization (market-cap) and price. Two popular stock indices for tracking the performance of the U.S. market are the Dow Jones Industrial Average (DJIA) and the Standard & Poor's 500 Index (S&P 500).

FIGURE 3.7 Dow Jones Industrial Average

This figure shows the Dow Jones Industrial Average index level between 2010 and 2019.

Source: S&P Dow Jones Indices LLC (2019b).

 DJIA. The DJIA is one of the oldest, most famous, and most frequently used indices in the world. It measures the stock performance of 30 large companies listed on U.S. stock exchanges. These companies are mature companies traditionally paying dividends over time. The DJIA represents about 25 percent of the total value of the U.S. stock market. Figure 3.7 shows the trendline of the DJIA between the first quarter (Q1) of 2010 and Q1 of 2019.

 S&P 500 Index. Another market indicator is the S&P 500 Index, which is an index of 500 of the largest companies in the U.S. market. Stocks are selected for this index mainly based on company size, which is measured by market capitalization, along with other factors such as public float (i.e., the number of a firm's shares available for trading in the market), financial stability, and the firm's historical record. The S&P 500 Index represents about 80 percent of the total value of the U.S. stock market, so it widely serves as an indication of the stock market and economy as a whole. Figure 3.8 illustrates the S&P 500's movement between Q1 2010 and Q1 2019.