S&P500 and DowJones Spread Betting

Dow Jones and S&P 500 Spread Betting

About the S&P 500

The S&P 500 is the second most followed index of large-cap American stocks after the Dow Jones.  The stock index is owned and maintained by Standard & Poor’s, a division of McGraw-Hill.   The S&P 500 is financial indices started in 1957 that lists the prices of the top 500 stocks in terms of capitalisation traded in the United States.  The stocks included in the index of S&P 500 are those of publicly traded companies that trade either on two of largest US stock exchanges, the NYSE Euronext and the NASDQ OMX.

About the Dow Jones

The Dow Jones Industrial Average (DJIA, Dow, or Dow Jones) is a stock market index created by Wall Street Journal editor and Charles Dow.  The average is named after an associate of Dow, Edward Jones.

The Dow Jones lists 30 large publicly owned companies based in the US and how they are trading in the stock market.  The “industrial” in the Down Jones industrial average is only there because of history and has nothing to do with the classification of stock, sectors or anything else.  The value of the Dow is not the average price of its stock index, but rather the sum of the index prices divided by a divisor, which changes several times per year depending on stock dividends and actions.

The DowJones is one of the most closely watched and speculated markets along with NASDAW, the S&P 500 an Russell 2000 Index.  Between the DowJones and the S&P 500, traders can determine the overall health of the US economy.

About Spread Betting on the Dow Jones and S&P 500

The Dow Jones represents the largest publicy traded companies on US soil.  This provides a number of big businesses and names to spread bet on with lots of transparency in terms of government/economic externalities and fundamentals.  Similar to the FTSE in the UK, both of these US stock markets are amongst the easiest to read and the size of their stock components provides lots of publicised material and news.  For beginner spread bettors, the DowJones is definitely one of the easiest to understand, analyse and spot trends for.

The volatility of the DowJones, including regular daily price movements, also makes it a high yielding index for spread betting.  By trading on leverage and correctly predicting trends in the market the DowJones can be very fruitful.

S&P500

The S&P 500 contains far more stock listings than the DowJones.  It allows spread bettors to speculate on an index of the US’s 500 largest publicly traded companies.  Its responsiveness to US externalities such as the US budget report and state of the economy in general makes it favourable for spread bettors to speculate on, particular the average price of the S&P 500 index and how the market shapes up in general.  A downside to the size and diversity of companies listed on the S&P500 means that externalities can affect certain stocks very differently to others, making it hard to analyse trends for the indices overall.  This makes it hard for spread bettors to second guess, making it less profitable for new spread bettors to trade on.

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