What’s the difference between the Dow Jones Industrial Average and the S&P 500?
Well, the Dow is a price-weighted index of 30 stocks. The S&P is a market cap-weighted index of 500 stocks.
Each one gives a very different reading of the stock markets.
But soon, they may give same reading.
The Wall Street Journal reports:
McGraw-Hill Cos. is in advanced talks with CME Group Inc. to combine stock-market icons such as the Dow Jones Industrial Average and S&P 500 into a joint venture that would give the firms more sway over investors and exchanges around the world, according to people familiar with the situation.
Talks to form a joint venture between McGraw-Hill’s S&P Indices business and CME’s Dow Jones Indexes unit began more than a year ago and could still fall apart, these people cautioned. If a deal goes through, the combined indexes business venture would be managed by McGraw-Hill, and the New York company would own the largest chunk of the joint venture. Under the terms being discussed, CME would get a minority stake of about 25%, while Dow Jones & Co. could have a minimal stake, people familiar with the matter said.”
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