What are the Top Indices in the US?

The US stock market is the biggest destination for many global giants to obtain funds. It is host to several top-most blue-chip companies and has a bright future. Additionally, there are other ways for individual investors to profit from the thriving US stock market and its burgeoning economy. The US stock market is humming with foreign money changing hands in various stocks, from small-caps to large-caps, and from domestic US firms to those based in China and Japan, among other nations. 

The US market has a number of stock market indices in place so that investors can participate in the growth of some of the top firms, including Facebook, Amazon, Apple, Netflix, Microsoft, Google, Starbucks, and Intel. To begin with, it’s crucial to monitor and follow the top US indices to take advantage of possibilities. Now, should you invest in NASDAQ or in the S&P 500? Before you decide on whether to invest in NASDAQ or S&P 500, it is important to learn more in-depth about the two:

The 100 largest and most frequently traded American companies listed on the stock exchange make up the Nasdaq-100  Index based on their market capitalization. Investing in NASDAQ from India would allow you to invest in some of the most forward-thinking businesses in the world, such as Microsoft, Apple, Starbucks, Intel, Google, and Tesla. It is a large-cap growth index. Investing in NASDAQ from India gives investors accessibility to many of the top firms in the world and a variety of investment products, including ETFs, Annuities, Options, and Futures. More than 7,000 products are linked to this index. In terms of performance, the Nasdaq-100 (NDX) has outpaced the S&P 500 (SPX) in ten out of the last twelve years, thanks to a significant allocation to top-performing sectors like consumer services, health care, and technology. 

One of the numerous S&P Dow Jones Indices, the S&P 500 is regarded as the most accurate measure of large-cap US equities. The S&P 500 Index is the country’s first market-cap-weighted stock market index. It was established in 1957 and is still among the oldest, boasting a 70-year-plus track record. The S&P 500 Index comprises almost 500 top corporations from about 11 different industries, accounting for about 80% of the market value of United States stock exchanges. Information technology, health care, and communication services make up the top three industries in the S&P 500, accounting for nearly 50% of the index. According to index weight, the top three equities are Microsoft, Apple, and Amazon.

What is the Difference Between the Composition of the Nasdaq 100 vs. the S&P 500?

Want to invest in NASDAQ from India? The disparity in downside returns between the S&P 500 and Nasdaq 100 since January of this year is astounding. Yet, it is nothing compared to the upside gains produced by Nasdaq previously. The S&P 500 and Nasdaq 100 were down by 11.73 percent and 18.55 percent as of August 11, 2022. With the markets in the grasp of bears, the first half of 2022 saw a catastrophic stock collapse. When stock prices rose in July, the month was comparatively better. With gains of 12% over the past month, the Nasdaq 100 appears ahead of the S&P 500.

• Nasdaq Composition 

Over 3,700 stocks on the Nasdaq stock exchange comprise the market cap-weighted Nasdaq Composite Index. By investing in NASDAQ from India, you get access to a comprehensive index heavily biased in favor of the critical technology industry and has become a standard of reporting on the financial markets.

All equity instruments listed on the Nasdaq Stock Market are included in the Nasdaq Composite Index, including tracking stocks, common stocks, common shares, units of real estate investment trusts, American depositary receipts, and publicly traded partnerships. If you invest in NASDAQ from India,  you should note that instruments of closed-end funds, preferred shares, exchange-traded funds, rights, convertible debenture securities, warrants, and other derivatives are not permitted to be included. 

In contrast to the S&P 500 Index, the other most commonly quoted market benchmark, the Nasdaq Composite, consists of the equities of companies with their headquarters outside the United States.

As of April 29, 2022, the Nasdaq Composite Index’s industry weighting based on the stocks it included was as follows:

As of March 31, 2022, the Nasdaq Composite Index’s most heavily weighted securities were as follows:

• S&P 500 Composition 

The composition of the S&P 500 currently reflects the fact that some industries and sectors have significantly outperformed others in recent years. Additionally, it implies that the index won’t have as many sectors. Stocks in the technology, healthcare, and consumer discretionary sectors dominate the S&P. In the meantime, fewer businesses are engaged in producing and distributing raw materials, real estate, or utilities.

The S&P 500’s sector or industry breakdown is as follows:

The S&P 500 most heavily weighted securities as of March 31, 2022, were as follows:

Selection Criteria of Stocks

The 500 biggest US stocks with a capitalization of $13.1 billion or more are included in the S&P 500. The firm that chooses the stocks also considers the company’s financial viability, public float, sector representation, and liquidity. The selection criteria for the Nasdaq Composite are substantially less complex. While investing in NASDAQ from India, you can access all common stock, both local and foreign, that is featured on the Nasdaq exchange and is included in the index.

Returns Comparison

The S&P 500 and Nasdaq-100 are among the most widely used equity indices in the United States. The Nasdaq-100 has a large portion of its portfolio invested in top-performing sectors like technology, consumer discretionary, and health care, which have significantly outperformed the S&P 500 between December 31, 2007, and June 30, 2022. The annual returns for each index, including dividend reinvestment, are shown below. 

Source: https://www.nasdaq.com/articles/when-performance-matters%3A-nasdaq-100-vs.-sp-500-second-quarter-22 

Despite recent widespread market volatility, the Nasdaq-100 TR Index maintains total cumulative returns that are almost 2.2 times greater than the S&P 500 TR Index. The Nasdaq-100’s one-year rolling volatility, determined by calculating the standard deviation for daily returns and annualizing it, has been slightly higher than the S&P 500 between December 31, 2009, to June 30, 2022. Given the Nasdaq-100’s strong exposure to the technology sector, the overall correlation of daily returns was an outstanding 93%. 

Which One Might be Ideal for you to Invest in?

The good news is that you may utilize index funds, other mutual funds, and exchange-traded funds to acquire exposure to various company sizes, assets, and locations to complete your total portfolio, just like with large-cap stocks. And keep in mind that you’re playing the long game when you put money into the stock market. Keep your investments intact when the market declines. Taking your time to hold on could help your assets to increase. 

Although indices can be built in various methods, sector segregation and capitalization are typically used to distinguish them. Indexes are crucial to the overall study of the American stock market. Indexes and their fluctuations shed a lot of light on the economy, the risk tolerance of the investing public, and the trends for diversifying investments. Making any kind of investment decision generally requires an awareness of the subtleties of their design and development. You can find more here if you are wondering how to invest in NASDAQ from India.