Stock Indices questions, answered

S&P 500, Nasdaq 100, Dow and VIX: how the big benchmarks work and what moves them.

• How Is the Dow Jones Industrial Average Calculated?

  The Dow adds up the share prices of its 30 companies and divides by a number called the Dow divisor. Because it is price-weighted, a stock with a high share price moves the index more than a cheaper stock, regardless of company size. That is the main criticism of the index.

• What Happens to Stocks When the Fed Cuts Rates?

  It depends on why the Fed is cutting. Cuts made while the economy is still growing have often supported stocks by lowering borrowing costs. Cuts made because a recession is starting have not prevented big declines, as in 2001 and 2007–2008. Markets also move in advance on expected cuts.

• S&P 500 or Nasdaq-100: Which Index Is Better?

  Neither is better for everyone. The Nasdaq-100 holds 100 large non-financial Nasdaq companies and has risen more over the past five years, but it fell much harder in 2022 (−33% vs −19%). The S&P 500 is broader and more diversified across sectors.

• S&P 500 or Total Stock Market Index Fund: Which Should I Buy?

  They are very similar. An S&P 500 fund holds about 500 large companies covering roughly 80% of the US market's value; a total-market fund adds thousands of mid-size and small companies. Because large companies dominate both, returns have usually been close. Costs and simplicity matter more than the choice itself.

• What Is the VIX and What Does a Spike Mean?

  The VIX is Cboe's estimate of how much the S&P 500 will move over the next 30 days, derived from option prices. A spike means traders are paying up for protection and expect bigger swings. It closed at 25.64 on November 6, 2026, above its long-run average of about 19.