The NYSE Composite Index monitors over 2,000 stocks listed on the New York Stock Exchange (NYSE) and includes foreign and tracking stocks, real estate investment trusts, and American Depositary Receipts (ADRs), giving investors a comprehensive view of market performance.
Think of the index as a playlist of top hits from various genres, countries, and artists, offering a diverse mix of investments similar to a compilation album rather than a single artist’s studio album.
Here’s a breakdown of how the NYSE Composite Index functions, its weighting, and how to invest in it.
How the NYSE Composite works
The NYSE Composite Index (NYA) was established in 1966 to represent all common stocks traded on the NYSE and tracks four main sectors: utility, industrial, financial, and transportation. Due to its comprehensive nature and inclusion of high-quality companies, many investors use it to assess the performance of the economy and markets.
These diverse components help investors gain a broader perspective.
- Foreign stocks: Over 300 global, non-U.S. companies are featured on the NYSE Composite Index.
- Tracking stocks: These stocks, issued by companies, track the financial performance of a specific segment within the company, allowing investors to focus on that particular business unit.
- American Depositary Receipts: ADRs are equity securities that enable global companies to be traded on major U.S. exchanges like the NYSE. For example, Toyota uses ADRs to trade in the U.S.
- Real estate investment trust: A REIT is a company that owns, manages, or finances real estate and provides income to investors who want exposure to that market without owning property.
The NYSE Composite includes numerous well-known companies, such as those listed below as of July 2024.
| American Express (AXP) | Dollar General (DG) | JPMorgan Chase (JPM) |
| AT&T (T) | Exxon Mobil (XOM) | Morgan Stanley (MS) |
| Bank of America (BAC) | FedEx (FDX) | Nike (NKE) |
| Best Buy (BBY) | Ford Motor Co (F) | Pfizer (PFE) |
| Boeing (BA) | General Mills (GIS) | Procter & Gamble (PG) |
| CAVA Group (CAVA) | General Motors (GM) | Target (TGT) |
| Chevron (CVX) | Goldman Sachs (GS) | Toyota (TM) |
| Coca-Cola (KO) | Home Depot (HD) | Walmart (WMT) |
| Delta Air Lines (DAL) | IBM (IBM) | Walt Disney (DIS) |
How the NYSE Composite Index is weighted
The NYSE Composite Index is weighted based on the float-adjusted market capitalization of each company. Market capitalization is calculated by multiplying the share price by the number of outstanding shares. The index is measured in points, such as 18,539.37, with a base of 5,000 points. Companies with larger market capitalizations have a greater impact on the index’s performance.
Changes in these prices over time reflect the index’s performance and provide insight into how the market, or a specific sector, has fared.
How the NYSE Composite compares to other indexes
The NYSE Composite Index stands out for its range of assets, while other well-known indexes focus on fewer companies and offer less diversification.
- The S&P 500, for instance, comprises approximately 500 of the largest publicly traded stocks from both the NYSE and the NASDAQ, serving as a benchmark for overall market performance.
- The Dow Jones Industrial Average includes 30 large-cap, blue-chip stocks primarily listed on the NYSE and is price-weighted, meaning stocks with higher prices have a greater influence on its valuation compared to the NYSE Composite Index and the S&P 500.
- The NASDAQ Composite Index, like the NYSE Composite Index, only lists the 3,000 companies on the NASDAQ stock exchange, focusing on tech and growth stocks that may highlight emerging companies.
How to invest in the NYSE Composite Index
As with any index, you cannot directly invest in the NYSE Composite, which is a hypothetical portfolio rather than a financial product. While there are no exchange-traded funds tracking the NYSE Composite as of July 2024, you can invest in a total market index fund that includes many of the same stocks or purchase individual stocks listed on the index.
- Total market index funds: Seek funds that track an index covering the entire stock market, providing diversification and exposure to many of the stocks featured on the NYSE Composite.
- Individual stocks: You may also consider holding individual stocks listed on the NYSE Composite Index, which can be bought and sold through a brokerage account.
Bottom line
The NYSE Composite Index acts as a benchmark for investors and analysts seeking to assess the broader market’s performance. Investors interested in similar market exposure can invest in individual stocks or total market index funds containing some of the largest and most influential companies on the NYSE.
Editorial Disclaimer: All investors are encouraged to conduct their own independent research into investment strategies before making investment decisions. Additionally, investors should be aware that past performance of investment products does not guarantee future price appreciation.