S&P, Dow, and Nasdaq

For the S&P 500 vs Dow Jones

Then the Nasdaq is both a stock exchange and an index with a heavy presence from the technology sector.

They are indices that reflect the performance of the companies within them. The DOW has 30 stocks, S&P has 500, and NASDAQ has however many that are listed on its exchange. Companies' stock prices will rise and fall often from economic reports, changes in laws and regulations, monetary policy etc. So in a broad sense, you can look at the "scroll" you called it and if the DOW is down 2% on the day there was probably some bad economic news or something.

Its not that they're that important, it's just a way of organizing a bunch of stocks into one massive portfolio. If you have a mutual fund you are probably investing in companies that are in the S&P.

I heard they're adding a bitcoin ticker to CNBC

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I heard they're adding a bitcoin ticker to CNBC

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To the OP:

The S&P, the Dow (actually the Dow Industrials, there are other Dow indices as well) and the NASDAQ are all basically averages that give one an overall view of how the stock "market" is doing.

These averages are calculated in different ways and may include different stocks, if you really want to use them as indicators of anything you should probably familiarize yourself with the details. Personally I prefer the Wilshire 5000 simply because it has a broader base.

A really big use of these averages is as a benchmark - fund manager John Doe will claim that his fund performed x percent better than the index of his choice. Of course he will usually pick the index that makes his fund look the best.

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LSUgirl4

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An epic day for the Money Talk board!

Now if only we could get kfizzle85 to start posting again...

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explain why these are so important

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The S&P 500 is the one that's most important, because it's the one that's most liquid and gets the most volume, and which serves as a benchmark for a wide variety of derivatives (calls, puts, swaps, etc.) If you look at Professor Robert Shiller's online data going back to 1871, for example, he focuses on the S&P 500.

Prices for shares in the largest corporations generally reflect investors' expectations of future profitability, which generally indicates optimism about the wider economy's health, but which also reflect expectations about monetary inflation and the relative prospects for stocks over other assets classes (like real estate, bonds, currencies, emerging markets, commodities, etc.).

The DJIA is just historically well known because it was the first of its kind, being first published in 1896. Almost nobody working in the financial industry pays attention to it anymore, but it still gets quoted in the news because most older people grew up with it as their best frame of reference.

The NASDAQ was a big deal in the late 1990s, because it showed how dramatic the dot-com bubble was for corporations in the technology. People may begin focusing on it a little more once the next big venture capital / tech IPO wave arrives, but indices that focus on specific sectors lack the macroeconomic information that the S&P 500 brings to the table. If you are interested in investing in a particular industry sector, though, you might want to use something similar to NASDAQ as a benchmark to measure your performance.