We regularly purchase and use US goods in our routine. We can also acquire ownership of these businesses if we can buy their products and use them. You can diversify your investments by buying stocks on the US stock market in several places. So, it’s important to understand what Dow Jones and Nasdaq are and how they differ from each other before making an investment in the US market.
The stock market does, however, include some hazards. Make sure you comprehend the fundamentals of the stock market before investing in the US stock market.
Learn about Nasdaq and Dow Jones, how they differ from one another.
What are Dow Jones and Nasdaq?
Dow Jones
1) Edward T. Jones, Charles Dow, and Charles Berkstresser established Dow Jones.
2) Dow Jones was Founded in 1896.
3) The index consists of 30 large US corporations. Companies like UnitedHealth Group, Goldman Sachs Group, Home Depot, Amgen are listed in Dow Jones.
4) These businesses are well-known and well-liked in every home.
5) Both the NYSE and NASDAQ are markets for this index.Investors from all over the world follow it to gain a sense of the global stock market.
Nasdaq
1) National Association of Securities Dealers Automated Quotations is the full name of NASDAQ.
2) NASDAQ was founded in 1971
3) The largest technology companies in the world, including Apple, Google, Meta, Amazon, etc., are listed on Nasdaq.
4) Nasdaq exchange has the biggest trading volume in the world, which contributes extreme to volatility.
5) By market capitalization, Nasdaq is one of the biggest and most well-known stock exchanges in the world, coming in second to the NYSE.
Popular US stock market indices like Dow Jones and Nasdaq are made up of stocks from various industries. In addition to these two indexes, there are additional well-known indexes including the S&P 500 and Russell 2000.
The NYSE (New York Stock Exchange) and NASDAQ are the significant and top stock exchanges of the US stock market.
The trading hour in the US market starts from 9:30 AM in the morning to 4:00 PM in the evening.
Dow Jones Vs Nasdaq: What's the Difference?
The main distinction between these two indexes is that Dow Jones is an index while Nasdaq is a stock exchange.
While Dow Jones was founded in 1896, Nasdaq was founded in 1971.
NASDAQ serves as the NASDAQ index’s trading platform. Conversely, NASDAQ and NYSE serve as Dow Jones’ trading platforms.
In the US, Nasdaq is a well-known stock exchange. It consists of the Nasdaq index, which consists of more than 3500 traded stocks.
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The Nasdaq Stock Market has three different market tiers:
- Capital Market (NASDAQ-CM small cap): is an equity market for businesses with modest market capitalization levels.
- Global Market (NASDAQ-GM mid cap):Â contains shares that serve as a symbol for the Nasdaq Global Market. There are 1,450 equities available on the global market.
- Global Select Market (NASDAQ-GS large cap):Â is an index of US and foreign equities that represents the NASDAQ Global Select Market Composite and is weighted by market capitalization (NQGS). There are 1,200 stocks in the Global Select Market.Â
On the other hand, The top 30 well-known corporations are represented in the Dow Jones index.
General Electric (NYSE:GE), which was a Dow component until recently, and many businesses that are no longer in operation, such as American Tobacco, American Sugar, and Chicago Gas, were among the 12 industrial corporations that the Dow followed when it was first introduced in 1896.
The index climbed from 12 to 20 components in 1916, and to 30 companies in 1928, just as it does now. When the index started listing businesses like Coca-Cola and Procter & Gamble, which are still included in the index today, in 1932, it started to reflect the larger market rather than just industrial stocks.
Most of the Nasdaq-listed stocks are technological companies that are in the growth stage. Stocks that are listed on Dow Jones, however, are not always there. If the stocks don’t match the requirements, they could be taken off of the index.
The market capitalization of the business and the stock’s outstanding value are the foundations of Nasdaq. The Dow Jones index, on the other hand, is based on an average price index. It implies that the computation takes into account any split or change in the company’s share price.
The performance of the stocks in the technology sector affects how the Nasdaq performs. Since the volatility is higher than the Dow Jones index, it is also riskier. whereas the performance of 30 firms determines the success of the Dow Jones index. The index volatility is lower and the risk is lower because these companies represent a variety of market capitalizations and industry sectors.
There are three degrees of access to the Nasdaq investment quotes. Market makers use the third level, which comprises quotes from market makers who wish to sell the stock, while the first level features the highest bids and the lowest requests. On the other side, investors can purchase ETF futures contracts and options to invest in Dow Jones.
Dow Jones Companies
The thirty companies included in the Dow Jones Industrial Average are listed below at the time of publishing this post.
- American Express (NYSE:AXP)
- Amgen (NASDAQ:AMGN)
- Apple (NASDAQ:AAPL)Â Â Â Â
- Boeing (NYSE:BA)
- Caterpillar (NYSE:CAT)Â Â Â Â
- Chevron (NYSE:CVX)
- Cisco Systems (NASDAQ:CSCO)
- Coca-Cola (NYSE:KO)
- Dow, Inc. (NYSE:DOW)Â Â Â Â Â
- Goldman Sachs (NYSE:GS)
- Home Depot (NYSE:HD)
- Honeywell International (NASDAQ:HON)
- Intel (NASDAQ:INTC)
- International Business Machines (NYSE:IBM)Â Â Â Â Â
- Johnson & Johnson (NYSE:JNJ)
- JPMorgan Chase (NYSE:JPM)
- McDonald’s (NYSE:MCD)
- 3M (NYSE:MMM)
- Merck (NYSE:MRK)
- Microsoft (NASDAQ:MSFT)
- Nike (NYSE:NKE)Â Â Â Â Â
- Procter & Gamble (NYSE:PG)
- Salesforce.com (NYSE:CRM)Â Â Â Â Â
- Travelers (NYSE:TRV)
- UnitedHealth Group (NYSE:UNH).
- Verizon (NYSE:VZ)
- Visa (NYSE:V)
- Walgreens Boots Alliance (NASDAQ:WBA)
- Walmart (NYSE:WMT)
- Walt Disney (NYSE:DIS)
Conclusion
Market indices include Nasdaq and Dow Jones. As a result, you cannot directly trade in the index. Although they track and invest in the equities that are included in the index, you can trade in their index funds. Additionally, you can invest by trading in ETFs. Since US company share prices are quite high and can purchase fractional shares.
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