Question

Why are the S&P, DOW, and NDX indices considered representative of general USA equity markets?

Answer 1

Dow Jones and Nasdaq along with S&Pare considered representatives of United States equity market as majority of the stocks in the United States markets have been listed on these in the Indices and they are traded regularly and they have been trading since long by large participation of a large number of traders and investors.

The large number of market participants are always trying to find out the actual price of these companies by continuously trading through stock exchange and finding the true price through fair price discovery mechanism by adequate demand and adequate supply.

So these equity indexes are always be considered an active representation of United States equity market, as majority of the stocks are listed and there is a large number of market participation also.