What is NASDAQ? and DowJones?

Question

I don't really understand, is nasdaq a big trading company that gets money from holding all the stock trades? and what is DowJones?

Answer 1

The Dow is just an index composed of the stock of 30 large companies. It's weighted and the formula is really complicated, but essentially this average moves up or down with the value of the underlying stocks. People follow it because it is an economic indicator, since these are 30 of America's largest companies. Really the Dow is just a math equation...

The NASDAQ is both an index and an exchange (where stocks are traded). Stocks can trade many different places. For example, the NYSE is the trading floor they show on the news. The NASDAQ is an electronic exchange, there is no trading floor. When you see that the NASDAQ is up or down, this again is just an index. As the individual companies traded on the NASDAQ exchange move up or down, the value of the index changes. It is not a trading company, it is simply a marketplace where buyers and sellers can exchange shares. Think of it like eBay, and just like eBay the exchange does make money from various sources, but without actually selling you the product directly.

Answer 2

NASDAQ is an alternative stock exchange. In the US there are 3 principle stock exchanges, NYSE, NASDAQ and the American Stock Exchange. A particular stock for a US company is traded on one of those 3 exchanges. You will find company's with 2 and 3 letter symbols (JNJ = Johnson and Johnson, IBM, GE, etc..) which are usually older established companies listed on NYSE. NASDAQ is newer and covers a lot of high tech companies like Microsoft (MSFT), Cisco (CSCO), notice they have 4 letters in their symbol. American Stock Exchange (AMEX) is older, but usually has smaller, less well known companies. There is no hard and fast rule for who is listed on one exchange versus the other. At least that I know of.

Dow Jones is a "media" company, i.e. a news organization. They predominately deal with financial information, but that is not all they do. When you hear people talk about the Dow, they are usually talking about a composite index of 30 companies stocks that are called the Dow Industrial 30. The Dow 30 contains a diverse selection of 30 well known US companies - MacDonalds, Boeing, JNJ, GE, GM, FORD etc.(see link) that provide a pulse of the business market on any given day. The Dow tracks the stocks of those companies. Did they collectively go up, down, stay the same relevant to their previous close? There are a number of other stock indexes that are out there - such as the S&P 500, which actually tracks 500 companies instead of 30, which is statistically a better thermometer than the Dow.

Answer 3

DJ are 30 most important stocks. NASDAQ lists some stocks and allows there trading