Stock indexes explained: S&P 500, Nasdaq 100, Dow and Russell 2000 (ES, NQ, YM, RTY)
What each U.S. stock index holds, the futures that track them and their point values, why a few giant companies matter so much, and why NQ and ES move differently.
When you trade ES or NQ, you're not trading a company. You're trading a whole stock index, a basket of hundreds of companies rolled into one price. Knowing what's in that basket tells you why it moves the way it does, and why NQ and ES don't always agree.
What a stock index is
An index is a list of companies with a rule for adding up their prices into one number. When most of the big companies in the list rise, the index rises. Futures like ES and NQ let you trade where that number will be, without buying any of the stocks.
The four big U.S. indexes
| Index | What’s in it | Futures (full / micro) | Value of 1 point |
|---|---|---|---|
| S&P 500 | About 500 of the largest U.S. companies, weighted by their size | ES / MES | $50 / $5 |
| Nasdaq 100 | The 100 largest non-financial companies on the Nasdaq exchange, heavy in technology | NQ / MNQ | $20 / $2 |
| Dow Jones Industrial Average | 30 large, well-known companies, weighted by share price | YM / MYM | $5 / $0.50 |
| Russell 2000 | About 2,000 smaller U.S. companies | RTY / M2K | $50 / $5 |
More on contract sizes in ES vs NQ vs micros and ticks, points, margin and leverage.
Why a few companies matter so much
The S&P 500 and the Nasdaq 100 are weighted by company size, so the largest companies count far more than the smallest. A handful of giant tech companies make up a big share of both, and an even bigger share of the Nasdaq 100. When one of them reports earnings or has bad news, the whole index can move. See earnings season.
Why NQ and ES move differently
- NQ is more concentrated in technology and growth companies, so it usually moves more, in both directions, than ES on the same day.
- Rate news hits NQ harder, because growth companies are more sensitive to interest rates. See the Fed and interest rates.
- RTY (small companies) often reacts to the U.S. economy and borrowing costs, because smaller firms depend more on loans.
- When all four move together, it's usually a big-picture day: rates, inflation or fear. When they split, it's often sector news.
What it means for a day trader
- Pick one index and learn its personality. NQ's daily range in points is several times ES's, and its swings are bigger in dollars too.
- Glance at the others. If ES is rising and NQ is falling, the move is narrower and less reliable than when they agree.
- Know the earnings dates of the biggest companies. They can move the whole index after the close and at the next open.
- Start with micros. MES and MNQ move exactly like ES and NQ at one tenth of the dollar value. See start with micro futures.
Next in this series
Next: bonds and yields, the market behind the market. Previous: the jobs report.
This article is for education only and isn't financial advice. Contract specifications can change; check the exchange's current specifications. Trading futures involves substantial risk of loss.