Difference Between NYSE and Nasdaq Exchange

Nasdaq is one of the two major US stock exchanges. Unlike the older New York Stock Exchange which is an auction market, the Nasdaq is a dealer market. While the NYSE matches the highest bid with the lowest asking price, the Nasdaq buying and selling happens electronically and virtually instantaneously.  While the NYSE and one designated market maker for each stock, the Nasdaq has fourteen on the average. While investors see the NYSE as the home for long term, stable stocks, investors go to the Nasdaq to find growth stocks, mostly in the tech sector.

Dow and Nasdaq Charts

In trading stocks for companies under Nasdaq traders use charts the same way as they do for NYSE companies, the Dow Jones Industrial Average, and others.

Example from Kitco

Dow and Nasdaq charts are both useful by themselves but can also be used side by side for comparisons and to help decide where to trade. Otherwise, Dow and Nasdaq charts work pretty much the same in terms of timing trades, using important moving averages, and for other purposes.

Dow Jones SP 500 Nasdaq

Although many choose to only invest in or trade companies under Nasdaq, most investors pick and choose among Dow Jones, SP500, Nasdaq and even foreign stocks based on their assessment of intrinsic stock value and tools like a stochastic trend. Investors who want to invest in ETFs that track these sectors will choose the Dow if they want blue chip companies, the S&P 500 if they want a broad cross section of the market, and Nasdaq if they want to track tech stocks, especially the FAANG stocks that have been leading the market.

Compare Dow Jones Nasdaq S&P

New traders and investors often want to know how to compare Dow Jones, Nasdaq and S&P. The three indexes track closely as the underlying companies are all affected by the business cycle and factors that drive the economy. Also, stocks like Apple are included in all three indices. When you compare Dow Jones, Nasdaq, and S&P it is useful to know how each is calculated. In each case total market capitalization is divided by a number that takes into account things like stock splits over the years.

Current Dow Jones Nasdaq

Although the stocks in the Dow Jones and companies under Nasdaq are both subject to market forces, they may react differently. For example, the Dow contains ExxonMobil, General Electric, and Boeing. Each of these has been hit hard by the covid-19 pandemic and other factors. However, tech stocks like Microsoft have benefitted from the movement to business online and other factors related to social distancing.

Cheapest Nasdaq Index Fund

Many investors gave up trying to pick their own stocks years ago. They also gave up on having someone else manage their investments. Rather, they use a dollar cost averaging approach to put money into the cheapest Nasdaq index fund they could find. Three low cost index funds suggest by Nasdaq include the Schwab US Broad Market (NYSEMKT: SCHB), iShares Core S&P Total U.S. Stock Market (NYSEMKT: ITOT), and Vanguard Total Stock Market (NYSEMKT: VTI).

Define Nasdaq Index

How do you define a Nasdaq index? According to Investopedia, the Nasdaq composite index is

the market capitalization-weighted index of over 2,500 common equities listed on the Nasdaq stock exchange. The types of securities in the index include American depositary receipts, common stocks, real estate investment trusts (REITs) and tracking stocks, as well as limited partnership interests. The index includes all Nasdaq-listed stocks that are not derivatives, preferred shares, funds, exchange-traded funds (ETFs) or debenture securities.

This is the best measure of the overall performance of companies under Nasdaq.

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