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"Which index is best at gauging the strength of the US stock market…

- - - - Standard and Poor's 500 (S&P 500) tracks the performance of the top 500 leading publicly traded companies in the US. Launched in 1957. Float adjusted market capitalization weighted.
    - - Dow Jones Industrial Average (DJIA) tracks the performance of 30 of the largest public blue chip US stocks. Launched in 1896. Contains leading companies from most industries. Price weighted index.
    - - Nasdaq Composite index tracks almost all stocks listed on the Nasdaq stock exchange. Launched in 1971. Primarily contains stocks from the technology sector. Market capitalization weighted index.
- - - - Cover all 11 of GICS classification system defined sectors. Uses GICS classification.
  - - - Covers 9 out of 11 classification system defined sectors. Uses GICS classification
  - - - Covers all 11 of classification system defined sectors. Uses ICB classification
- - - - Earnings: The sum of most recent four consecutive quarters should be positive, as should the most recent quarter .
        Liquidity: A minimum of 250000 shares should trade every 6 months before inclusion evaluation date.
        Market Capitalization: Unadjusted company market capitalization of 12.7 billion US dollars.
        Portion of shares held by public investors: Minimum of 10% public float.
        IPO seasoning: Twelve months required.
        Location of company: The company should be from the US.
        Stock exchange listing: Must be listed on the New York Stock Exchange (NYSE) or Nasdaq or CBOE.
        Stock Type: Common.
        (S&P Dow Jones Indices Announces Update to S&P Composite 1500 Market Cap Guidelines and Results of S&P Composite 1500 Index Consultation on Market Capitalization and Liquidity Eligibility Criteria, 2023) (Tesla Added to the S&P 500, 2020) (S&P US Indices Methodology, 2023)
    - - “Quarterly in March, June, September, and December” (S&P Global, no date). “Monthly and quarterly assessments are typically preferred” (A. Pinkasovitch, 2022).
    - - “Float-adjusted market cap” weighing method (S&P 500®, no date).
        “maintain the continuity of an index level following the implementation of corporate actions, index rebalancing events, or other non-market driven actions” (Index Mathematics Methodology, 2023). “the figure is scaled to a more easily handled number (e.g., 2000)” (Index Mathematics Methodology, 2023).
        “free-float methodology tends to reflect market trends” (J. Chen, 2020)
        
        Free float methodology used is consider to represent the market better as it only considers the available shares, not the restricted shares. (A. Kumar, no date).
        “free-float methodology tends to reflect market trends” (J. Chen, 2020).
  - - - Excluded stocks: Classified under Global Industry Classification Standard (GICS) code 2030 (Transportation) and 55 (Utilities) .
        Previous index: Companies listed on DJIA are taken from companies on the S&P 500.
        Location of company: The company should be from the US
        (Dow Jones Averages Methodology, 2022)
        “index universe consists of securities in the S&P 500” (Dow Jones Averages Methodology, 2022)
      - Weighing method
        
        The DJIA uses a “price weighted” weighing method (S&P 500®, no date). “The Dow divisor is a figure used to normalize the Dow Jones Industrial Average (DJIA) value given the prices of its 30 component stocks” (A. Hayes 2022). “better match the existing composition of the index” (CFI Team, 2023).
        
        Weighing method may provide an unclear outlook as its based on stock price. So small companies with higher stock prices have a higher representation than larger companies with lower stock prices (L. Borga, 2022).
    - - The DJIA does not use a set rebalancing frequency, the rebalancing frequency is “N/A” (S&P Global, no date). This is as “there is no annual or semi-annual reconstitution” (Dow Jones Averages Methodology, 2022).
        The indexes rebalances its composition at any time the deem appropriate.
  - - - No criteria's, other than stock exchange listed on, and stock type. The stock must be exclusively listed on the NASDAQ stock exchange, and it must be common stock.
        
        “all domestic and international common type stocks listed on the Nasdaq Stock Market” (Nasdaq Index Methodology, 2020).
        It lacks an IPO seasoning criteria - “stock can get volatile immediately after getting listed on the stock exchanges” (D. Maheshwari, 2023).
        Contains some international stock - “this index includes some companies that are not based in the United States” (C. Banton, 2022).
    - - Market capitalization weighted index. The divisor is used to “arrive at a more appropriate figure for reporting purposes” (CFI team, 2023).
    - - Rebalanced daily.