The Dow Jones, Nasdaq and S&P 500 are stock market indices that track a specific group of stocks. The close tracking of these specific groups of companies gives a broad idea of how the market as a sector or as a whole is performing as well as indicates investor confidence in the market.
The Dow Jones Industrial Average has been around since 1869 and is made up of companies that are traded on the New York Stock Exchange or the Nasdaq exchange. Notable Dow companies include Coca-Cola, Apple, Nike, and Home Depot.
Nasdaq is more involved than the Dow Jones Industrial Average. There is a Nasdaq stock exchange, but there is also the Nasdaq Composite and the Nasdaq 100—the latter two are market indexes and report the ups and downs of particular stocks that are listed on the exchange. The Nasdaq 100 is comprised of 100 companies that are not necessarily financial stocks such as Tesla, Netflix, Starbucks, and PepsiCo, while the Nasdaq Composite is made up of more than 3,000 stocks that are traded on the Nasdaq.
The S&P 500 is comprised of 500 U.S.-based companies with publicly traded stocks. This market index tells a more complete report of what the market is doing as a whole (even better than the Dow or the Nasdaq 100). It’s interesting to note that the S&P 500 is constantly changing as companies grow and make their way into the market index and other companies decrease in size and are no longer considered to be a part of the index.