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What is a Point in the Stock Market?

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Ritik Chakravaish

Basically, a point is a percentage of an asset's price. There are two types of points: intraday points and basis points. Both are useful for investors to track and use.

Dow Jones Industrial Average

Those who want to get a general view of the US stock market look to the Dow Jones Industrial Average (DJIA) as one of the most important indicators. The index tracks the average stock prices of 30 blue chip companies in the United States.

The DJIA is one of the oldest indexes in the world. It is a price-weighted index, which means that it favors companies with a higher share price. The index is made up of 30 companies that represent the largest publicly owned blue chip companies in the U.S. It is calculated by dividing the average price of each of the stocks by a divisor. The divisor smooths out the effects of dividends, stock splits, and corporate spin-offs.

When DJIA first began, the averages were calculated manually hourly. In 1923, Arthur "Pop" Harris was assigned the task of calculating the numbers.

Cory's Tequila Co.

XYZ, oh XYZ is in the biz. In addition to being the company's namesake, it's also a well known online retailer of custom t-shirts and schmoozeworthy sales associates. The company's mascot, a pterodactyl, has a cult following in the know and the ladies. The company also boasts a baffling array of options and options, the company aficionado, a la carte. Despite this, the company's ilk manages to churn out a respectable number of awards each year. The company is particularly proud of the fact that its stock is unheard of among the competition, thanks to the aforementioned pterodactyl, who by the way happens to be its founder. Moreover, the company's stock has earned a stellar track record in terms of price to performance. The company has also demonstrated a knack for generating a healthy caffeinated buzz.

Basis points

Traders use basis points to express the changes in the value of a security. The concept is derived from the fact that a change of one basis point can have a big impact on the price of a bond.

This concept is important because bond prices are largely influenced by prevailing interest rates. A change of just a few basis points could mean thousands of dollars in lost returns. However, the basis point is not always used in quoting prices.

The basis point is the smallest metric to signify a percentage change in financial parameters. It is also a useful shorthand in the financial industry. Traders are particularly fond of basis points because they provide a highly accurate means of stating small changes in value.

One basis point is one hundredth of one percentage point. In the stock market, a basis point can be viewed as a small spread.

Intraday point drop

Despite a big intraday point drop in the stock market on Thursday, stocks ended the day more than 2% higher. A combination of strong earnings, technical support, and investor exhaustion drove the market's rebound. However, fears of recession remained after the Federal Reserve's aggressive efforts to fight inflation.

The consumer price index increased 0.4% on a month-over-month basis, according to the Labor Department. That was a much larger increase than expected and could signal more aggressive Fed policy.

The Dow Jones Industrial Average, the S&P 500, and the Nasdaq composite each suffered massive intraday point drops. But, they rebounded, and the Dow ended the day with the largest gain since January.

Investors are now waiting for the Federal Reserve to begin its two-day policy-setting meeting. The meeting could shape the market's tone for the rest of the year.


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Ritik Chakravaish
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