The Dow Jones and S&P 500 are stock market indices that track overall market performance. The Dow Jones is made up of 30 large-cap US stocks, while the S&P 500 tracks 500 large US stocks. Holdings in both indices must meet certain criteria and are selected by committees. But the Dow Jones and S&P 500 differ in value, size and diversification.
The S&P 500 is a collection of 500 large-cap stocks that trade on US exchanges, while the Dow Jones tracks just 30 stocks.
The Dow Jones is price-weighted, so stocks with higher prices have a greater impact on the index. In the S&P 500, stocks with a higher market capitalization have a greater impact on the index. Each company’s size is measured by the stock price multiplied by the total number of outstanding shares, adjusted for a public float.
Low margin rates
CA & US trading
The “bigger” index could be the one that tracks a greater number of stocks or the one that tracks stocks with a higher total market capitalization. The S&P 500 tracks more than 16X the number of stocks than the Dow Jones, which tracks just 30.
The market capitalization of all stocks in the S&P 500 is around $36.7 trillion USD (about $48.91 trillion CAD). The Dow Jones has a market cap of $10.35 trillion USD (about $13.78 trillion CAD). Market cap is the stock price multiplied by the number of outstanding stocks.
The company with the largest weighting in the Dow Jones is UnitedHealth, which has a market cap of $463 billion USD ($616.36 billion CAD). The largest weighting in the S&P 500 is Apple with a market cap of $2.17 trillion USD ($2.89 trillion CAD).
With 500 stocks, the S&P 500 is more diversified than the Dow Jones, which only tracks 30 stocks. However, Dow Jones stocks are split across a good range of different sectors. Both the Dow Jones and the S&P 500 have a large number of stocks in the technology sector.
If you’re looking for diversification and you like the look of the Dow Jones, you could always add another index fund to the mix to get some global diversification.
Here are some of the best performing S&P 500 and Dow Jones funds:
| Icon | Fund | 5 year performance | 1 year performance (to Nov 2022) | Link to invest |
|---|---|---|---|---|
 | Vanguard S&P 500 (VFV.TSX) | 11.96% | -8.39% | Buy on Interactive Brokers |
 | iShares Core S&P 500 (XSP.TSX) | 11.01% | -14.18% | Buy on Interactive Brokers |
 | Invesco S&P 500 Low Volatility (SPLV.NYSEARCA) | 9.89% | -0.82% | Buy on Interactive Brokers |
 | SPDR S&P 500 ETF (SPY.NYSEARCA) | 12.68% | -12.80% | Buy on Interactive Brokers |
 | Xtrackers S&P 500 Swap (XSPX.LSE) | 12.48% | -13.64% | Buy on Interactive Brokers |
| Icon | Fund | 5-year performance | 1-year performance (to Nov 2022) | Link to invest |
|---|---|---|---|---|
| iShares Dow Jones U.S. ETF (IYY.NYSEARCA) | 12.12% | -15.05% | Buy on Interactive Brokers |
| SPDR Dow Jones Industrial Average ETF Trust (DIA.NYSEARCA) | 12.51% | -4.25 | Buy on Interactive Brokers |
| SPDR Dow Jones Global Real Estate UCITS ETF (SPYJ.XETRA) | 1.96% | -20.55% | Buy on Interactive Brokers |
 | Lyxor Dow Jones Industrial Average (LUX) UCITS ETF (C010.XETRA) | 11.94% | -5.23% | Buy on Interactive Brokers |
As you can see from the chart above, these indices have historically performed very similarly. You’ll notice that the market capitalization of the S&P 500 is around 3 times that of the Dow Jones despite having more than 16 times the number of stocks on the index.
This means that the Dow Jones is a bit more concentrated. Neither index is better. The one you choose would depend on the stock breakdown you’re interested in. As it’s only got 30 stocks, the Dow Jones wouldn’t create as much diversification as you might be looking for in an investment. The S&P 500 has plenty of diversification available.
| Dow Jones | S&P500 | ||
|---|---|---|---|
 | Apple | | Apple |
 | Microsoft | | Microsoft |
 | Johnson & Johnson |  | Amazon |
 | UnitedHealth |  | Meta Platforms (formerly Facebook) |
 | Visa |  | Alphabet Inc A (Google) |
These trading apps allow you to invest in companies within the indices or funds/ETFs that hold stocks in Dow Jones and S&P 500 companies.
The Dow Jones and S&P 500 track US stocks. A committee determines the holdings in both indices according to certain criteria. Both indices include some major, large-cap stocks. Many of the stocks on the Dow Jones are also included in the S&P 500, so you’d essentially be investing in both, except for a few stocks, by aligning your investments with the S&P 500.
Online stock tradingDisclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.
Your guide to how ETFs work and whether this type of investment is right for you.
Read more…
Learning how to read stock charts and recognize chart patterns can unlock your success as a trader.
Read more…
Owning a stock means you own part of a company and can potentially grow your wealth. But there is a risk of loss.
Read more…
Learn how to research stocks and find the right investment opportunities in 4 steps.
Read more…
Market volatility can be nerve-wracking. Discover 3 trading strategies plus the pros, cons and risks of investing in volatile markets.
Read more…
A simple guide to buying stocks in your favourite European soccer team.
Read more…
Steps to owning and managing Yoshitsu Co. stocks, with 24-hour and historical pricing before you buy.
Steps to owning and managing Cerberus Cyber Sentinel stocks, with 24-hour and historical pricing before you buy.
Steps to owning and managing Fresh Vine Wine, Inc stocks, with 24-hour and historical pricing before you buy.
Steps to owning and managing DGX with 24-hour and historical pricing before you buy.
Everything we know about the Nuvectis Pharma IPO plus information on how to buy in.
Steps to owning and managing BuzzFeed, Inc stocks, with 24-hour and historical pricing before you buy.
These are the best renewable energy stocks to buy now in Canada.
A failed SPAC deal pulled the plug on this vertical farming company’s plans to go public. But you can buy stock in other sustainable farming companies.
Everything we know about the Reddit IPO plus information on how to buy in.
Want to know how to buy and sell stocks in Canada? Find out what you need to know in this simple, step-by-step guide.
