NYSE Composite Index
In 1966, the NYSE established the NYSE Composite Index to provide a comprehensive measure of the market trend for the benefit of many investors who are concerned with general stock market price movements. The indices consist of a Composite Index of all common stocks listed on the NYSE and four subgroup indices—Industrial, Transportation, Utility, and Finance. The indices are basically a measure of the changes in the aggregate market value of NYSE common stocks, adjusted to eliminate the effects of capitalization changes, new listings, and delistings. The market value of each stock is obtained by multiplying its price per share by the number of shares listed. The aggregate market value, which is the sum of the individual market values, is then expressed relative to a base-point market value. The base value was set at 50 on December 31, 1965, because this figure was reasonably close to the actual average price of all common stocks at that time. The arithmetic procedure in calculating the index is shown in the following simplified example: year-end total market value of common stocks, $5,943.5 billion, divided by adjusted base market value, $901.9 billion, multiplied by 50 equals the index, 329.51 at year-end. Every measure of changes in stock prices—index or average—must frequently be adjusted to reflect only movements resulting from auction market activity and to eliminate the influence of corporate actions. This index deals with any change in the capitalization of an individual issue or of all issues in aggregate by making a proportionate change in the base figure's market value.