Major US Stock Indices : S&P500, Dow Jones, NASDAQ Composite Index

Dow Jones Industrial Average

Almost everyone is familiar with the Dow. The first question that investors normally ask is "How is the Dow doing?" The Dow may be the most popular index to the layman but it actually represents only the top 30 US companies. The Dow is actually the Dow Jones Industrial Average (ticker symbol ^DJI, DJIA or $INDU). Through the years, Dow Jones (the publishing company & owner of this index), has tweaked the components of the Dow to keep it relevant with the times and to present an accurate snapshot of how the US economy is performing. Real-time Dow Jones Quotes Click Here.

Standard and Poor's 500 Stock Index (S&P 500)

The Standard & Poors 500 Stock Cash Index (ticker symbol: $SPX, INX or ^GSPC) is a much more broad-based index comprising of the 500 top companies in the US. Most professional money managers and traders use the S&P500 rather than the Dow to make their overall trading and stock investment decisions. The S&P500 is also a popular index for fund managers and hedge funds to peg their performance against. Just look at any mutual fund prospectus, you will normally find fund managers comparing their performance to the S&P500 index.The S&P500 stock index also forms the basis for the S&P500 full and mini futures contracts traded at the Chicago Merchantile Exchange (CME). The popular SPYDERS Exchange Traded Fund (symbol: SPY) is also based on the S&P500 cash index.

Nasdaq Composite and Nasdaq 100

The Nasdaq Composite (ticker symbol: $IXIC or COMPX) is also another widely followed index and it consists of all companies listed on the Nasdaq. Most of these companies are technology companies so its common for market commentators to refer to it as the "Tech-heavy" Nasdaq Index. An offshoot of the Nasdaq Composite is the Nasdaq 100 index (symbol: $NDX) and as its name suggests, it consists of the top 100 companies traded on the Nasdaq. The Nasdaq 100 also forms the basis for the Nasdaq 100 full and mini futures contracts traded at the Chicago Merchantile Exchange (CME). The Nasdaq 100 also forms the basis of the wildly popular and liquid Exchange Traded Fund, the QQQQ (formerly QQQ or triple Q's).

Stock Sector Indices

The indices discussed above are broad based indices giving an insight into the broad US economy. There are also stock sector indices which give an investor a more focused and targeted look at how the various components of the US economy are doing. Some stock sector indices include:

• Semiconductor Index (^SOX)
• Banking Index (^BKX)
• Biotechnology Index (^BTK)
• Pharmaceutical Index (^DRG)
• Gold Index (^XAU)
• Oil Index (^XOI)
• Computer Hardware Index (^HWI)
• Networking Index (^NWX)
• Airline Index (^XAL)
• Telecommunications Index (^XTC)