Knowing what indexes a company’s stock is listed in can be an important predictor of the stock’s future price movement. Events that affect markets and sectors as a whole tend to move all of the stocks within the underlying index. Moreover, index-based funds must buy shares in the companies that are listed in the index they track, so its addition to an index affects its price.
A company’s addition to an index or its removal from it can be big news. For example, Amazon.com (AMZN) was added to the Dow Jones Industrial Average in February 2024, replacing Walgreens Boots Alliance (WBA). Good news for Amazon, not so good for Walgreens.
But there are thousands of indexes out there, most of them tracking specific industries, sectors, or asset types, and their regular revisions don’t make a splash. There are still ways to find out which index or indexes are tracking a particular company’s stock.
Key Takeaways
- Stock indexes and exchange-traded funds (ETFs) can include a long list of companies, and it’s important to know their top holdings.
- Being aware of the companies included in an index or exchange-traded fund gives investors more information about the fund’s probable direction.
- In many cases, the website of the company that maintains the index will list its holdings or its top 10 holdings.
- If the information isn’t there, other sources like Yahoo Finance have the information.
Where to Look
Many websites provide information for investors on which companies are included as components of the major stock indexes and exchange-traded funds.
One place to find lists of index components or company stocks that make up an index is the website of the index maker. For example, you can find the list of company stocks included in the Nasdaq 100 by going to Nasdaq.com.
Going straight to the primary source—the website of the index maker—is ideal. However, the information isn’t always easy to find. It can be quicker to check a website like Yahoo Finance or MarketWatch that aggregates this information so you can find it in one place.
Notable Stock Indexes
There are thousands of stock indexes, but a few major ones get much of the attention, and the funds that track them get the lion’s share of investors’ money. They include:
- The Dow Jones Industrial Average (DJIA)
- The Standard & Poor’s 500 Index (SPX)
- The Nasdaq 100 Index (NDX)
- The New York Stock Exchange Composite Index (NYA)
- The Wilshire 5000 Total Market Index (W5000)
- The Russell 2000 Index (RUT)
A number of l ETFs and mutual funds are designed to track the major indexes, such as the SPDR Dow Jones Industrial Average ETF (DIA), which tracks the Dow, and the Invesco QQQ ETF (QQQ), which tracks the Nasdaq 100.
Note
Both Yahoo and Marketwatch offer free information on the components of stock indexes. Sites like Morningstar and Zacks Investment Research have the information but charge a subscriber fee to access certain information.
How to Find the Lists
Yahoo Finance
First, head to the Yahoo Finance quote page. Next, type the name or symbol of an index into the quote box, such as the Dow Jones Industrial Average or symbol DJI.
From the summary page for the index, click on “Components.” That’s where you’ll find the list of stocks that are included in the index.
MarketWatch
If you go to the MarketWatch home page, you’ll see a list of some of the most notable industry indexes. If you click on one, such as the S&P 500, you’ll come to the overview page for that index.
If you scroll down a bit, you’ll see a list of the components of the index, divided into top performers and bottom performers.
How Often Does the Dow Jones Average Change Its Components List?
The Dow Jones Industrial Average is designed to track the performance of the 30 U.S. companies whose stocks best reflect the health of the whole U.S. economy. As such, it changes relatively infrequently.
Its most recent changes:
- Apple Inc. replaced AT&T in March 2015.
- DowDuPont replaced DuPont in September 2017.
- Walgreens Boots Alliance, Inc. replaced General Electric Co. in July 2018.
- Amazon replaced Walgreens Boots Alliance, Inc. in February 2024.
How Often Does the S&P 500 Index Change?
The Standard & Poor’s 500 Index, better known simply as the S&P 500, tracks the stock movements of the 500 largest companies listed on U.S. stock exchanges. It is updated quarterly after the close of business on the third Friday of March, June, September, and December.
Why Do ETFs Track Indexes?
Most individual investors, even fairly rich ones, cannot buy the individual stocks of 30 or 500 companies in order to create a balanced, diversified portfolio. Other investors are interested in investing in an industry like technology or energy but want to avoid the risk inherent in stock-picking.
Most ETFs and many mutual funds track indexes because they offer these individual investors a way to achieve a diversified portfolio of investments. The investors are buying a tiny slice of every company that is seen as highly indicative of the direction of a sector, an industry, or the markets as a whole.
The Bottom Line
An index is a list of companies that are deemed to best represent the overall market, a single industry, or a single sector. The index is weighted to reflect each stock’s relative importance to the mix, and those weightings are adjusted, or “rebalanced”, periodically to keep their weightings accurate.
The movement of the index from one day to the next is an indicator of the market’s current direction overall. Stocks are said to be “up” or “down” on the day based on the movements of the Dow Jones Industrial Average or the S&P 500 Index.
For this reason, the creators of the index have to adjust the list periodically, dropping some companies, adding others, and tweaking the ratings to reflect a whole sector as accurately as possible.
If you invest in an index-based ETF or mutual fund, it’s a good idea to check once a year or so to see what has changed.
Read the original article on Investopedia.