The key indicators for U.S. stocks are the Dow Jones Industrial Average (DJIA), the S&P 500 Index, and the Nasdaq Composite Index. Leading economic indicators used by analysts to assess the U.S. economy include gross domestic product (GDP), the consumer price index (CPI), the nonfarm payroll report and the consumer confidence index.
Common Indicators for the U.S. Stock Market
The (DJIA) is an average derived from 30 of the top stocks traded on the New York Stock Exchange (NYSE). It is the most highly used and frequently quoted of all the leading stock market indicators.
The S&P 500 index is comprised of 500 stocks chosen based on market capitalization, liquidity and industry sectors. The S&P 500 is a broad market indicator of U.S. equities. The index is a value-weighted index with each stock’s weight proportionate to its market value.
The Nasdaq Composite Index is weighted by capitalization of the market. It includes more than 3,000 stocks on the Nasdaq Stock Exchange. Included in the index are American depository receipts, real estate investment trusts and many small-cap stocks.
Common Indicators for the U.S. Economy
The GDP measures the price value of all goods and services made in the U.S. Included in this indicator is all consumption which occurs in both the public and private sectors. GDP reports are issued quarterly and annually.
The CPI is a measure of a weighted average of a mixture of consumer goods and services. The CPI is calculated by using price changes for all items within the selected mix. Changes in price in relation to the cost of living are examined by looking at changes in the CPI.
The monthly nonfarm payroll report is a key employment indicator. It often has a significant impact on equity and forex markets. It also estimates average work week and average weekly salaries of non-farm employees. The report does not include employees of the government, self-employed workers, employees of non-profit groups or farm workers.
The consumer confidence index is a closely watched survey that assesses the optimism or pessimism consumers express regarding the economy.