The numbers for Nasdaq, the Dow Jones Industrial Average, and S&P 500 so arbitrary. How did they come to be? What do the numbers even mean?
are so arbitrary*
The Dow is calculated using the price of each stock in the index and the S&P is calculated using the market capitlization of the stocks in the index and so is the NASDAQ.. The indexes are designed to track a certain part of the market, like large cap industrial stocks or large cap stocks over certain sectors of the market. Its not the number per se that matters. Fourteen thousand by itself doesnt mean anything. But relative to seven thousand the difference has meaning. The relative price of the stocks in the index dropped 50 percent. Or the relative market cap has changed.