“I rarely think the market is right. I believe non dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” -Mark Cuban

The term ‘market’ is always thrown around in financial discussions. However, the term can refer to a number of different stock market indexes which cater to different parts of the economic market. These different indexes do not move together and their conditions are influenced by different factors. Understanding the different types of market indexes and knowing some basic information about them is a helpful tool in investing.

Dow Jones Market: The Dow Jones Industrial Average is the most popular market index in the world not to mention the oldest. It contains stock options from around the world including thirty of the world’s biggest corporations. The Dow Jones index is weighted. As the Dow fluctuates and changes it is a good indicator of how the expected earnings and risks of corporations are also changing. The Dow Jones is composed of some fairly influential companies and for that reason a change, good or bad, in the Dow Jones average usually represent the trend that is occurring in the global market.

Nasdaq: The Nasdaq market index is known at the market which trades technology stocks. Over 5,000 technology corporations trade their stocks in the Nasdaq. These companies are not just in the United States but worldwide. In addition to tech stocks the Nasdaq also indexes stock options from financial, industrial, and transportation sectors. Unlike all over markets, the Nasdaq also includes speculative companies. The condition of the Nasdaq market is a good indicator of how the technology market is doing as a whole

S&P 500: Investors will often brag that they have beaten the market. The market they have conquered was probably the S&P 500. The Standard & Poor’s 500 stock index is actually more expansive and more varied then the Dow Jones. It is made up of over 500 of the most commonly invested in stock options in the United States. If you want to know how the economy is doing in the United States just take a look at the condition of the S&P 500 market.

Wilshire 5000: The Wilshire 5000 is a complete market index. It includes a huge number of stocks totaling over 7,000 of the world’s 10,000 stocks that are traded publicly. This market index has stocks from all industries and business sectors. While lesser known then the S&P 500, it is actually a better economic indicator because it indexes many more stocks.

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