The New York Stock Exchange and Stock Market Indexes
The New York Stock Exchange (NYSE) is located in New York City. It is one of the biggest stock exchanges in the world and lists over 3,200 companies. The NYSE allows buyers and sellers to trade stock efficiently among each other. Just as a supermarket allows business to be conducted between merchants and consumers, the NYSE allows stock to be sold between buyers and sellers.
Up until January 2007, stocks were bought and sold on the floor of the NYSE. Now, the Hybrid Market has allowed stocks to be easily bought and sold electronically. The NYSE is efficiently run and set up specifically. All stock brokers must know where to go when they are ready to trade stock.
All stock brokers on the floor must hold a seat on the exchange. There are 1,366 seats available that are bought and sold similar to stock on the exchange itself. They are very expensive but are required to be on the floor and trade.
When you watch the news during the financial segment, they often tell you how the Dow or the S&P 500 is doing. These are both Stock Market Indexes. The Dow is short for Dow Jones Industrial Average. It includes 30 large companies.
The value of the Dow is computed using a price-weighted average. This is done by adding up all the prices of each of the 30 stocks and then dividing it by 30. This keeps a proportionate number among each of the stocks. The Dow is looked at as a portfolio holding one share of each stock each at the same price (after the price-weighted computation).
The S&P 500 is short for Standard & Poor’s Composite 500. This index is better than the Dow because it includes 500 stocks and is a market value-weighted index. This means that the value is calculated based on the market value of the shares outstanding. For example, if one stock has stock outstanding at twice the value of another, it is weighted twice as much.
Financial experts use Market Value Indexes to rate the overall progress of the stock market. For example, they will compare the value of the S&P 500 last month to this month to see if it went up or down. The Dow is used as well the same way, as are other indexes.
If you want to succeed in the stock market, you must understand the exchanges you buy from and the indexes well. They will help you tremendously and have been proven to be effective.






































