The stock market is a large indicator of the health of the economy in the United States. Understanding the stock market from a high level is important because we would be able to predict when dips or small crashes in the market occur. For this study, we are going to be reviewing the Nasdaq, Dow Jones, and S&P 500 market indexes and examining the market values.
Stock Market Indexes
For those who are new to the stock market and terminologies, the stock market index is a measurement of a portion of the stock market. Each index does not track every single stock price at a given time, but they do track a decent number in volume. Each company’s stock included in the index is are averaged by a weighted average.
The Dow Jones market index makes up the top 30 largest companies, the S&P 500 makes up of large 500 companies, while the Nasdaq includes about 5,000 different stocks. Although Nasdaq combines more stocks, Dow Jones consists of higher volume and value companies.
Date Pulled: 08/29/2017 11:30pm
Total Snapshots per Index: 2,083
First Date Captured: September 2, 1977
Last Date Captured: August 29, 2017
High Level View
From the initial view, you may notice the dramatic drops and climbs in the Dow Jones and Nasdaq. Let’s observe what happened during the major drops and the frequency of each drop.
The 2008 Stock Market Recession
October 12, 2007, the Dow Jones index was the highest recorded ever. In 2007, the Dow Jones index increased 15.2 times in value than in September of 1977. Understanding this may help understand why the 2008 recession was so tough for so many people. Keep in mind that the Dow Jones comprises of 30 of the largest companies which employee 6,430,670 people. See the 30 companies in the Dow Jones below.
In March 6, 2009, the market dropped nearly 53% within 73 weeks, which is almost a 3 percent drop every month. It wasn’t until March 1, 2013 that the market went back up to where it was in 2007, over 5 years to recover. The Nasdaq and the S&P 500 followed a similar trend as the Dow Jones
Dow Jones 30 Companies
Dow Jones consists of the 30 largest companies. Each company has a total number of shares and each share is worth a dollar amount. The table below is pulled from CNN Money. The total employees column was pulled from other sources.
|Company||Price||Volume||YTD Change||Volume * Price||Total Employees|
|AXP American Express||$85.42||2,779,385||15.31%||$237,415,066.70||62,500|
|DD E I du Pont de Nemours and Co||$82.24||1,832,308||12.04%||$150,689,009.92||52,000|
|XOM Exxon Mobil||$76.45||7,060,375||-15.30%||$539,765,668.75||83,700|
|GE General Electric||$24.44||23,910,062||-22.66%||$584,361,915.28||333,000|
|GS Goldman Sachs||$219.96||2,369,131||-8.14%||$521,114,054.76||33,300|
|HD Home Depot||$149.84||5,368,723||11.75%||$804,449,454.32||385,000|
|JNJ Johnson & Johnson||$132.21||3,277,875||14.76%||$433,367,853.75||127,100|
|JPM JPMorgan Chase||$91.10||10,886,082||5.57%||$991,722,070.20||250,355|
|PG Procter & Gamble||$92.32||3,676,277||9.80%||$339,393,892.64||105,000|
|TRV Travelers Companies Inc||$123.01||1,476,237||0.48%||$181,591,913.37||30,000|
|UTX United Technologies||$118.70||5,572,881||8.28%||$661,500,974.70||197,200|
Below is the stock value of the Dow Jones companies as of August 29, 2017. Boeing and Goldman Sachs holds the lead.
Each company gives a portion of their value to a shareholder. This is called a stock. Each company doesn’t allocate an equal number of stocks for the company, some may have 10,000 and others may have 29,000,000, which is Apple’s case. If a single person were to purchase every single stock that Apple has, they would need 4.8 trillion dollars.
A company my be extremely wealthy, but the economist will ask, how many employees does the company employ? As we can see, Wal-Mart is the winner. Wal-Mart employs more employees than the state of New Mexico, the 36th largest state in the United States.
Taking a look at the stock market from a high level is beneficial. From this study, we learned:
- In 2007, the Dow Jones index increased 15.2 times in value than in September of 1977
- In March 6, 2009, the market dropped nearly 53% within 73 weeks
- If a single person were to purchase every single stock that Apple has, they would need 4.8 trillion dollars
- Wal-Mart employs more employees than the state of New Mexico, the 36th largest state in the United States