Stock Market Points!?
Published on Saturday, February 6, 2010 
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- Posted by admin at 6:51 PM UTC
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- Tagged with Market, Points, Stock
what does it mean when DOW loses 500 points? does it mean it they loss 500 shares? uhmmm… what is the difference between DOW and New York Stock Exchange? it’s index? and does it mean the higher the points the wealthier the market? why does BRAZIL stock exchange has more points thant NYSE? explain please
3 Comments
Comment by Jaminio
Most Indices are what is know as Market cap weighted. This means that the market cap (number of shares x price per share) is used to calculate the value of the companies weighting in the index. For example if a company is worth 100 and all of the other companies in the index are worth 900 then that company would be worth 10% of the index. The points part comes from when the index was started. For example, the FTSE 100 was started in 1986, the largest 100 companies in the UK were all added together and given a percentage weighting. The value of that index was then made 1000. So when they say the FTSE is worth 3892 points that means that the companies that make up the index have grown 382% since it was formed. It is the same thing with the S&P 500 in the USA only that started at 100 in the 60s it think.
The Dow Jones was the first index and was formed in before the 1920′s. it started at 100 but it is price weighted that means that a small company with a market cap of 100 but a share price of 1000 is higher weighted in the index than a large company with a MCap of 1000 but a stack price of 100. The same principle applies however, if the dow was worth 5000 points and loses 500 then the index has lost 10% of its value. This is more important on other indices as that would mean that the companies making up the index have lost 10% of their value.
The difference between the Dow and NYSE is that the Dow is made up of the 50 largest Industrial stocks in the USA. The NYSE is made up of companies that have the Primary listing (not ADR’s) on the NYSE.
The reason that Brazil (Bovespa) has more points is that it started from a much lower level and has had really rapid growth from its starting point. In reality it is much smaller than the likes of the Dow (in fact one company, Exxon is almost the same size as the entire Bovespa)
If you want to know what has the richest index you need to find out the market cap of each of the companies in the Index and add them all together. (It is probably the Russel 2000 as that has the largest 2000 companies in the USA)
Comment by Alvie
Stock market prices are measured in local currencies. Which means that the Dow is measured in US dollars and cents. While the Brazilian Bovespa is measured in Brazilian reals. And that’s why the numbers are different between different stock markets.
To compare the worth of international stock markets, you need to convert their numbers into the same currency. Or else the comparison is not valid.
Comment by keral
STOCK MARKET INDEX CALCULATE BASIS OF DIFFERENT CATOGERIES OF MAGER COMPANIES STOCK, ON THE BASIS OF WAITAGE. 500 POINTS LOSS MEAN , IF THAT DAY INDEX IS 10000 AND LOSS 500 MEAN , THE SHARE PRISE DOWN AVERAGE 5%