The Dow Jones Industrial Average (Djia) and the Nasdaq Composite Index are two of the most commonly followed stock market indices in the world. While both indices track the performance of large-cap stocks, there are a few key differences between them. In this blog post, we’ll take a closer look at those differences and explore which index might be a better fit for your investment needs.
What is DJIA?
- The Dow Jones Industrial Average (DJIA), also known as “The Dow”, is a stock market index that tracks the performance of 30 large, publicly-traded companies in the United States. The index is named after Charles Henry Dow, who founded The Wall Street Journal in 1882.
- The DJIA is a price-weighted average, meaning that the stocks with the highest prices have the greatest impact on the index. As of June 2019, the component stocks had an average price of $102 per share. The highest-priced stock was Apple, at $205 per share, while the lowest-priced stock was Walmart, at $101 per share.
- The DJIA is one of the oldest and most widely-followed stock market indices in the world. It is often used as a barometer for the overall health of the U.S. stock market, and it is also used to calculate other important indices such as the S&P 500 and Nasdaq Composite.
What is NASDAQ?
NASDAQ is a global electronic marketplace for buying and selling securities. It is the second-largest stock exchange in the world by market capitalization, behind only the New York Stock Exchange. NASDAQ is home to more than 3,000 companies, including Microsoft, Apple, and Amazon. The name “NASDAQ” is an acronym for “National Association of Securities Dealers Automated Quotations.” The Nasdaq Stock Market was founded in 1971 as the world’s first electronic stock market. Today, it is a leading provider of trading technology and market information services. In addition to stocks, NASDAQ also offers trading in options, exchange-traded funds (ETFs), and other derivatives.
Difference between DJIA and NASDAQ
Djia and Nasdaq are both indices, but there are some key differences between the two. Djia is a price-weighted average of 30 blue-chip stocks that trade on the New York Stock Exchange. Nasdaq, on the other hand, is a market index that tracks the performance of over 3,000 companies listed on the Nasdaq Stock Market. Djia is calculated using a simple average, while Nasdaq uses a more complex formula that takes into account market capitalization. Djia is also a more exclusive index, as it only includes stocks from major companies. In contrast, Nasdaq includes stocks from small-cap and mid-cap companies in addition to large caps. As a result, Djia tends to be more volatile than Nasdaq.
Conclusion
The Dow Jones Industrial Average (Djia) and the Nasdaq Composite are two of the most well-known indexes in the United States. But what is the difference between them? And which should you be watching if you want to invest in the stock market? The Djia, which was created in 1896, is a price-weighted index made up of 30 stocks from various industries. On the other hand, the Nasdaq Composite (created in 1971) is a market capitalization-weighted index that consists of over 3,000 stocks from across 75 different industries.
