How to Calculate Return on Indices in a Stock Market


Often, when people refer to "the market," they are referring to a particular stock market index. The most popular market index is the Dow Jones Industrial Average (DJIA), while others are the S&P 500 (large-cap stocks) and the Nasdaq (technology stocks). Calculating the return on any one of these indices is as easy as calculating the return for a given share of stock.

Review the calculation for return: profit divided by investment. If you buy a stock for $50 and it goes up to $100, your profit is $50: $50 divided by $50 equals 1, or 100 percent.

Get the ticker symbol for each index. The DJIA symbol, for example, is ^DJI.

Look up the prices for the DJIA, S&P 500 and the Nasdaq for the past year. Go to Yahoo! Finance (see Resource) and enter the ticker symbol.

Select two dates and note the prices of each index on these dates. Subtract the current price from the purchase price.

Divide this number by the purchase price and multiply by 100 for the market percentage return. All three indices track different market segments and may therefore have different rates of return over the same time period.

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