Both Dow Jones and NASDAQ index are popular US Stock Market indices that list stocks across various sectors that investors can track. Both are popular indices, and most investors use them with similar connotations. However, there are certain differences between the two. Dow Jones is a global stock market index. While on the other hand, NASDAQ is a stock exchange comprising an index. Here we summarize NASDAQ Index vs Dow Jones for easy understanding.
What is the NASDAQ Index?
The full form for NASDAQ is the National Association of Securities Dealers Automated Quotations. Also, this is the largest electronic stock exchange in the world by market capitalisation after NYSE in the USA. Furthermore, NASDAQ was founded in 1971 as a successor to Over-the-Counter (OTC) trading. Moreover, it has the highest trading volume compared to any other index in the world. However, it suffers from volatility because of the highest trading volume.
NASDAQ is also referred to as an index which is the NASDAQ Composite Index. Similarly, there are several indices that trade on the NASDAQ exchange. Also, the index comprises the largest technology companies like Apple, Amazon, Google, and many more.
What is Dow Jones?
The ‘Dow’ actually refers to the Dow Jones Industrial Average (DJIA). Charles Dow, Charles Berkstresser and Edward T Jones founded it in 1896. Also, it is an important index that investors follow globally to know how the stock market is performing. Furthermore, the DJIA tracks publicly listed companies. Therefore, DJIA is a stock index that tracks 30 large publicly listed companies in the USA and trades on NYSE and NASDAQ.
NASDAQ Index vs Dow Jones : Key Differences
The following table summarizes NASDAQ Index vs Dow Jones
|Parameter||NASDAQ Index||Dow Jones|
|Trading platform||NASDAQ only||NASDAQ and NYSE|
|Comprises of||NASDAQ is a stock exchange which comprises of NASDAQ index where more than 3500 stocks are traded.||It is only an index that comprises the top 30 publicly owned companies.|
|Stocks||It primarily includes technology-based corporations such as Apple, Google and other companies which are in their growth phase.||DJIA is circulating the company earnings and may be removed if the stock prices falter.|
|Based on||It is based on the company’s outstanding stock value i.e., the company’s market capitalisation.||It is based on price-weighted average index, which indicates that any stock split or adjustment is considered in the average price calculation.|
|Performance||The rise and fall of the stock market largely depend on the technology sector’s performance.||The performance of DJIA is based on 30 major companies as a group and not as individual stocks.|
|Volatility||More volatile||Less volatile|
|Accessible through||Investment quotes are available at 3 levels|
Level 1 – has the highest bid and lowest ask
Level 2 – displays all public quotes of market makers and dealers who are willing to sell or sell the stock.
Level 3 – Used by market makers to enter quotes and perform them.
|Investment in DJIA is accessible through |
NASDAQ Index vs Dow Jones refers to market indices, but investors can buy and sell stocks electronically only on NASDAQ as it is a stock exchange. Also, both market indices are not tradable as they represent a certain set of stocks based on specific criteria. Therefore, investors can purchase index funds or ETFs (Exchange Traded Funds) as these replicate the performance of the stock market index.