The Dow Jones Turns 127: A Look at the Origins and Evolutions of Major Stock Market Indexes
• The Dow Jones Industrial Average, the oldest stock market index created in 1896, tracks 30 major US companies but has limitations in how it is calculated.
• The S&P 500, introduced in 1957, is more comprehensive as it tracks 500 companies and is weighted by market capitalization.
• The Nasdaq Composite, launched in 1971 as the first electronic exchange, tends to focus on technology stocks and also weights by market capitalization.
• There are many other lesser known indexes that track specific sectors, company sizes, or use alternative weighting methodologies.
• A new "Magnificent Seven" index tracks 7 mega-cap tech stocks that powered markets in 2023 with 111% returns versus 24% for the S&P 500.