NASDAQ Index vs Dow Jones : What’s the difference ?

NASDAQ Index and Dow Jones are significant parts of the financial market. These are US stock markets listing stocks across various sectors. Investors can track their equities using the platforms. 

The terms “the Dow” and “the Nasdaq” refer to listings of stocks from different industries that investors can watch on the U.S. stock market. Both are widely followed and frequently used, to the point where they can occasionally be mistaken for the stock market or the U.S. economy as a whole. Instead, they are hypothetical depictions of the equity market that might give investors an indication of the state of the economy or the stock market.

People follow the two widely and even refer to them for their trading activities. However, they are different in their services. We’ll be analysing them with NASDAQ Index vs Dow Jones. 

So, let’s analyse them to improve our understanding of the stock market indices. 

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What is the NASDAQ Index?

NASDAQ index stands for National Association of Securities Dealers Automated Quotations. It is the largest electronic trading stock exchange in the US. The NASDAQ exchange was founded in 1971 and has been offering the best services since then. 

It came up as the successor to Over-the-Counter (OTC) trading. Besides, the platform has the highest trading volume compared to other global indexes. Also, it has the highest volatility as well due to trade volume. 

What is Dow Jones?

Dow Jones is the US stock exchange for Dow Jones Industrial Average (DJIA). It was founded in 1896 by Charles Dow, Charles Berkstresser and Edward T Jones. 

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Many investors globally follow the platform to understand how the stock market is performing. The company tracks the listed companies, and it tracks largely 30 publicly listed companies in the USA trading on NYSE and NASDAQ. 

NASDAQ Index vs Dow Jones: The Differences

Features NASDAQ Index Dow Jones
Meaning  Index indicating stock performance Electronic marketplace for investors to buy/sell securities  
Founded In  1971 1896
Index/Exchange Both Only Index of 30 companies
Trading Platform  NASDAQ Only NASDAQ and NYSE
Volatility  Highly volatile Less volatile
Based On Company’s outstanding stock value Price-weighted average index 
Stocks  Stocks of technology based corporations  It circulates the company earnings and may remove it if the stock price falters. 
Abbreviation National Association of Securities Dealers Automated Quotation Dow Jones Industrial Average 
Performance The increase and decrease of the stock market depends on technology sector performance Performance is based on 30 major companies as a group

 

The NASDAQ index and Dow Jones are two different stock market lists. NASDAQ all the companies that trade on NASDAQ are included. However, Dow Jones comprises only 30 companies. 

The NASDAQ companies are mostly technology and internet related. But it also has financial, consumer, biotech, and industrial companies. Several people refer to the Index due to the stand-in for the technology sector and their performances.

DJIA comprises only 30 major companies. These are companies founded on the New York Stock Exchange (NYSE). There are only a couple of NASDAQ-listed stocks, such as Apple, Cisco and Intel. 

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The performance of DJIA stocks greatly impacts the overall stock market. 

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NASDAQ Quotes and DJIA

NASDAQ quotes are available in three levels. Traders can know them for their efficient stock market trading: 

  • Level 1 shows the highest bid and lowest ask.
  • Level 2 is for all the public quotes of the market makers. There is associated information on the market dealers willing to buy or sell stocks and the recently executed orders. 
  • Level 3 is for market makers to enter the quotes and perform them. 

However, the DJIA circulation is computed differently. It takes the sum price of 30 stocks and divides them by the Dow Divisor. Besides, the divisor is adjusted as per the DJIA circulation. The stock splits, spin-offs and structural changes are taken for accuracy. 

Also, DJIA is accessible through options, futures, and exchange-traded funds (ETFs). But NASDAQ has three market tiers: 

  • Global selection market that has the highest initial listing standard of any exchange. 
  • Global market lists companies with overall leadership and international reach with the products and services. 
  • The capital market focuses on the core purpose of the companies listed for capital raising. 

Conclusion

NASDAQ index vs Dow Jones differences shows how traders can best use the stock market platforms. One has 30 major companies, while the other has the stocks of various companies. 

Both are popular in their ways and provide the best of services to stock market traders. The article introduces traders to the US stock market indexes and how traders can take advantage of their features and services. Thus, helping them to trade online with the best suitable one. 

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