The S&P 500, which was created by Standard & Poor’s in 1962, is the largest measure of the US economy among the three major indexes. The index value is calculated by weighting each company according to its market capitalization and then a denominator, set by S&P, is applied to produce the final value. A simple calculation is as follows: the total market capitalization of all included shares divided by the denominator or the total market capitalization/denominator. The Dow Jones Industrial Average often referred to as the “Dow”, is the oldest index, dating back to 1896 and is the most well known globally. The Dow represents 30 stocks as determined by the Wall Street Journal. Unlike the S&P 500 and Nasdaq 100, the weights for each component in the Dow Jones Industrial Average are sorted by share price and then divided to get a final value. If you are more interested in NAS100, you may want to visit http://www.cnie.org/forex/nas100-brokers.html to find brokers that trade it.
The Nasdaq 100 is the youngest of the three indexes after starting in 1985. It is the largest non-financial company listed on the Nasdaq exchange and it is generally considered to be a technology index due to the weight given to technology-based companies. The Nasdaq 100 is based on the market capitalization of its components. On the other hand, the Dow, which only owns 30 shares, is more affected by the performance of each stock. As it stands, the top 10 stocks account for more than 50% of the Dow’s value, making it easy to see how it could be more affected by strong price fluctuations in just a few hours.
The Nasdaq 100 is broader than the Dow in constituent numbers, but the impact of a smaller group of stocks is even clearer. The top 10 stocks on the Nasdaq 100 account for more than 50% of the index, leaving 90% of the index to account for less than half the index value. This makes the index very heavy and very sensitive to price changes in certain stocks. The more concentrated NAS100 and Dow have larger overnight gap than the broader S&P 500.