US stock market indexes are benchmarks that measure the performance of a segment of the American stock market. The most popular American stock market indexes include the Nasdaq Composite, the S&P 500 and the Dow Jones Industrial Average (DJIA).
These stock market indexes are indicators of the overall market sentiment. They help you identify the direction in which the market, or a market segment, moves. By tracking the performance of an index, you can understand the overall market behaviour and make investment decisions accordingly.
If you are interested in investing in the US markets, getting to know the American stock market indexes is a good place to begin. The most followed indexes include:
In addition to these broad market indexes, several other notable US market indexes reflect different segments of the market, such as the following:
The S&P 100, the MSCI USA Large-Cap Index, the Russell 1000 and the Dow Jones U.S. Large-Cap Total Stock Market Index
The S&P Mid-Cap 400, the Wilshire US Mid-Cap Index and the Russell Midcap
The Russell 2000, the S&P 600, the Dow Jones Small-Cap Value Total Stock Market Index and the Dow Jones Small-Cap Growth Total Stock Market Index
S&P Communication Services Select Sector (XLC), S&P Financial Select Sector (XLF), S&P Real Estate Select Sector (XLRE) and S&P Technology Select Sector (XLK)
This market capitalisation-weighted US stock exchange index includes almost all the stocks listed on the Nasdaq. Since most technology stocks in the US, such as Apple, Microsoft, Google etc., are listed on the Nasdaq, they make up a significant portion of the Nasdaq composite.
The Standard and Poor's 500, abbreviated to S&P 500, is another broad market index in the US. It comprises the top 500 companies in the American markets. On the whole, it represents around 80% of the total market capitalisation in the USA. The weighting method used to calculate this index is free-float capitalisation.
The Dow Jones Industrial Average, or DJIA, is one of the world's oldest and most tracked indexes. This price-weighted US stock market index comprises the 30 most significant and most prominent companies listed in the American markets. These companies include 3M, Apple, Boeing, Disney, IBM, Nike and Walmart (as of February 2023).
This market capitalization-weighted index is also known as the total market index because it includes all the stocks actively traded in the US markets. It is less popular than the above-mentioned broad market indexes, but it offers a comprehensive view of the US markets.
While you cannot invest in a US stock market index per se, tracking indexes give you an idea of the overall market movement. You can also replicate your portfolio according to your preferred index; or invest in mutual funds or ETFs that track indexes. Like, readymade benchmarks for your US Stocks portfolio. With Fi Money, this becomes easier. Download our app to invest in US stocks at zero brokerage and competitive forex rates.
The Dow Jones Industrial Average (DJIA) is a US stock market index, and nobody can invest in it per se. Instead, you can invest in US exchange-traded funds that track the Dow Jones and hold stocks in proportion to the DJIA.
The Sensex is an Indian stock market index. The American market has different primary market indexes like the Dow Jones Industrial Average (DJIA), S&P 500, NYSE, and Nasdaq Composite.