NYC Composite Index

1 Pages 228 Words

In 1966, the New York Stock Exchange (NYSE) established the NYSE Composite Index to provide a comprehensive measure of the market trend for the benefit of many investors who are concerned with general stock market price movements. The indexes consist of a Composite Index of all common stocks listed on the NYSE and four subgroup indexes -- Industrial, Transportation, Utility, and Finance.
The indexes are basically a measure of the changes in cumulative market value of NYSE common stocks, adjusted to eliminate the effects of capitalization changes, new listings and delistings. The market value of each stock is obtained by multiplying its price per share by the number of shares listed. The aggregate market value, which is the sum of the individual market values, is then expressed relative to a base point market value. The base value was set at 50.00 on December 31, 1965 because this figure was reasonably close to the actual average price of all common stocks at that time.
Every measure of changes in stock prices - index or average - must frequently be adjusted to reflect only movements resulting from auction market activity and eliminate the influence of corporate actions. Any change in the capitalization of an individual issue or of all issues in aggregate is dealt with in this index by making a proportionate change in the market value of the base figure....