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Standard & Poor's 500 (S&P)
A unit of McGraw-Hill, Standard & Poor's is an investment advisory service that performs several functions, including maintaining the S&P 500. The S&P 500 includes 400 industrial firms, 40 financial stocks, 40 utilities and 20 transportation stocks (all the firms are large). Inclusion in the index usually causes a stock's price to rise.
Dow Jones Industrial Average
The Dow Jones Industrial Average is the most famous and widely watched of market indicators. Published by Dow Jones & …
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…Dow Theory adherents will buy when the market moves higher than a previous peak, and sell when it goes below the preceding valley. When the two averages move together, one is supporting the other. This is because Charles Dow reasoned that industrial companies required shipment of production resources and finished goods. For the economy to remain strong, both averages need to move in tandem. Divergence of the two averages raises a caution flag.
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