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Difference Between Djia and S&P 500

stock-marketDjia vs S&P 500

Djia or the Dow Jones Industrial Average is one of the many popular stock market indices created by Charles Dow, the co-founder of Dow Jones & Company and a reputed editor of the Wall Street Journal. It was created on May 26, 1896 and took into account the overall average of as many as 12 stocks from some of the market leading American Industries. It is a particular index that gives a clear idea of the trading modes and trading graphs of some of the big publicly owned companies in the stock market during a particular trading session. On the other hand S&P 500 is a free float-weighted stock market index. It has been in use since 1957 gauging the prices of 500 large common stocks that regularly traded in the USA. Standard & Poor’s pioneered their first stock index in 1923. By linking the former “S&P 90′ to the S&P 500 index, the latter was successfully extended in reverse to 1918. Most of the stocks in S&P 500 belong to huge publicly owned companies that traded on either NASDAQ OMX or NYSE Euronext.

The purpose of Djia was to estimate the entire performance in the industrial sector of the total American Economy. The functioning of this index is largely influenced by economic reports, corporate reports, domestic and global political events and natural disasters that have the potential to influence the overall economy. According to experts, S&P 500 is only second to the Dow Jones Industrial Average in terms of performance as a widely held significant American stocks index. The performance of S&P 500 index can be traced by elements like exchange traded funds, pension funds and mutual funds.

Djia or the Dow Jones Industrial Average is the second oldest American Market index second only to the Dow Jones Transportation Average. On the other hand S&P 500 is a much later creation which has emerged as the leading index in the American economy maintained by the Standard & Poor’s, McGraw-Hill.

In the Djia or the Dow Jones Industrial Average, the average is calculated and thereon computed by taking into consideration the stock prices of the 30 most popular and large publicly held companies in the country. The average directly depends upon the price list and is a scaled average in order to reimburse the effects of stock splits and additional adjustments. S&P 500 is not just a market index but the term also refers to the 500 companies that have a common stock held within the index. S&P 500 index has a ticker symbol that varies. For instance,
^GSPC[1]
.INX[2]
$SPX[3]

Summary:

1. Djia is one of the most popular stock market indices in America created by Charles Dow. S&P 500 is a free float-weighted stock market index maintained by the Standard & Poor’s, McGraw-Hill.
2. Djia is the second oldest American Market index while S&P 500 is a much later creation which has emerged recently.
3. Djia is influenced by economic reports, corporate reports, domestic and global political events, natural disasters whereas the performance of S&P 500 is traced by mutual and pension funds.


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