The NYSE Composite Index measures the performance of all common stocks listed on the New York Stock Exchange, including American Depositary Receipts issued by foreign companies, Real Estate Investment Trusts, and tracking stocks. The weights of the index constituents are calculated based on their free-float market capitalization. The index itself is calculated based on price return and total return, which includes dividends.
The breadth of the NYSE Composite Index, with its ticker symbol NYA, makes it a far more comprehensive indicator of market performance compared to other narrow indexes that have fewer components.
Key Takeaways
- The NYSE Composite Index reflects the performance of all the stocks listed on the New York Stock Exchange.
- It offers a perception of quality due to the strict listing requirements and showcases global diversity because of its wide array of holdings.
- The NYSE lists more than 2,400 companies, with international firms constituting about one-third of the total market capitalization.
Understanding the NYSE Composite Index
The NYSE Composite Index includes all NYSE-listed stocks, including foreign stocks, American Depositary Receipts, real estate investment trusts, and tracking stocks. The index excludes closed-end funds, ETFs, limited partnerships, and derivatives.
The two primary benefits to investors of the NYSE Composite Index are its quality, as all constituents must meet the stringent listing requirements of the exchange, and its global diversification, with international companies accounting for about one-third of the market capitalization. This diversity makes it a more effective representative of the broader stock market than many narrower indexes.
How the NYSE Composite Index Works
The New York Stock Exchange launched the composite index in 1966. It was updated in 2003 with a methodology that aligns more closely with other popular broad-based US indexes.
ICE Data Services sponsors and administers the index, taking over from the Securities Industry Automation Corp which maintained and calculated the index until 2003 when Dow Jones Indexes assisted in its relaunch.
Under the current methodology, the composite index excludes various security classes from inclusion, such as closed-end funds, ETFs, preferred stocks, derivatives, shares of beneficial interest, trust units, and limited partnerships.
The last trading price of the included securities is utilized to calculate the composite index. Regular maintenance includes monitoring and adjusting for companies added or deleted from the index. Actions like stock splits and stock dividends may necessitate changes to account for common shares outstanding and stock prices. Furthermore, index divisor adjustments might be required for activities such as share issuance, impacting the aggregate free-float adjusted market capitalization of the composite index.
Related Terms: American Depositary Receipts, Market Capitalization, Real Estate Investment Trusts, Total Return, Listing Requirements.
References
- Intercontinental Exchange. “NYSE Index Series Methodology”,
- Intercontinental Exchange. “NYSE International Listings”.
