The 4 scoreboards behind 'the market' 📺
Yesterday the Nasdaq sank and the Dow closed green. Someone in my comments called that split wild, and it is, until you look at what each number is actually counting.
"The market" on the news is really four different scoreboards.
🇺🇸 S&P 500
500 big US companies, weighted by size. The bigger the company, the more it moves the number. This is the one most people mean when they say the market was up.
💻 Nasdaq Composite
Pretty much every stock listed on the Nasdaq exchange, thousands of them, also weighted by size. It leans hard into tech, so a rough day for AI names lands here hardest. (Its cousin the Nasdaq 100 is just the 100 biggest non financial names on that exchange. That's the one QQQ tracks.)
🏛️ Dow
Only 30 companies, and it's weighted by share price instead of company size. So a stock with a high price per share pushes the Dow around more than a far bigger company with a low one. Weird, yes. It's also more than a century old and nobody's rewriting it now.
🇨🇦 TSX Composite
Canada's main one. Heavy on banks, energy and miners, light on tech. Which is why a monster day for US tech can do almost nothing for it.
So when two of them disagree, nothing is broken. They hold different stuff in different amounts. $AAPL, $MSFT and $NVDA are in both the Dow and the S&P 500, and they pull a completely different weight in each.
Next time a headline says stocks fell, check which scoreboard it's quoting. Your own portfolio probably looks like none of them.
Educational, not financial advice. Just my read.
