Market Indexes: A Third Quarter Update
The end of September (I know, we aren't there yet) brings about the conclusion of the third quarter of the calendar trading year. While obviously anything can happen between now and December 31 (elections anyone?) overall market activity is showing that the market is teeing up nicely for a solid finish. Plenty of occurrences have caused the market angst this year - terrorism acts in Europe, the exit of the United Kingdom from the European Union, North Korea throwing a fit again, the Olympics, and all the nitty gritty bits of awful that come with the American Presidential Elections - we lived through it!
But exactly what kind of year are we setting up for?
Here are the year-to-date returns for the three major U.S. indices: the Dow Jones Industrial Average, the NASDAQ and the S&P 500. While these may not feel like prosperous times, for those who have made the leap back into the stock market, the prosperity is quite tangible...
Dow Jones Industrial Average
The Dow is not an index, but rather is a price-weighted average of the 30 most significant stocks that trade on either the NASDAQ or the New York Stock Exchange (NYSE). It was created by Charles Dow back in 1896 as a quick and easy way to see general health of the American economy by looking at what companies best represent its general health across all sectors. The recent addition of Apple Inc. (AAPL) to the index may have helped boost overall performance over the past year, but its recovery despite trying geopolitical and economical factors this year have been quite a marvel.
As with all of these charts, it's very obvious to see where Brexit happened and where the terrorist events in Europe took place. Nevertheless, the Dow is currently returning 5.17% year-to-date and is hovering near its all-time highs.
The NASDAQ IS an index where stocks trade and it's actually an acronym for National Association of Securities Dealers Automated Quotations and was founded in 1971 by the National Association of Securities Dealers (NASD). The 4.08% year-to-date return of the NASDAQ is interesting since the index is very heavy in technology and internet-based companies. Strength has been relatively weaker for these sectors so far this year, in the first two quarters it pulled back majorly relative to last year but in this most recent quarter, the index has more than made up the difference. Alright!!
Lastly, the Standard & Poor's 500 is an American stock market index based on the market capitalization of 500 large companies having common stock listed on the NYSE or NASDAQ. One could say this this is a more accurate representation of the American economy as it's return is spread out among 500 companies rather than just 30 in the Dow. A sizable 5.63% year-to-date is quite a great return for the S&P 500, and it's also worth noting that each quarter was marginally better than the previous quarter - hopefully this trend holds true into the end of the year and we'll be in great shape.
The lesson here? GET IN THE MARKET!