Dow Jones U.S. Economic Stimulus Index

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The Dow Jones U.S. Economic Stimulus Index is an index based on U.S. companies from sectors that are expected to receive stimulus dollars under the American Recovery and Reinvestment Act of 2009. The index was introduced in May of 2009.[1]

Background

The 50-stock Dow Jones U.S. Economic Stimulus Index seeks to capture the "momentum" of the U.S. economic stimulus package and its effect on the largest and most liquid stocks in six economic segments. Dow Jones Indexes mapped the key areas targeted by the American Recovery and Reinvestment Act to six core categories: Alternative Energy, Construction & Materials, Energy Grid, Environment, Technology, Telecom/Internet.[2]

To be eligible for inclusion, a company must be a component of the Dow Jones U.S. Total Stock Market Index, must have a three-month minimum average daily trading volume of $5 million and must be categorized in one of the six categories determined by Dow Jones Indexes. Within each of the six categories, stocks are selected top-down based on float-adjusted market capitalization until the target component count per category is achieved. The number of components is determined based on the percentage of stimulus dollars allocated to each category.

The top five index components by free-float market capitalization are Microsoft Corp. (category: Technology), AT&T Inc. (category: Telecom/Internet), General Electric Co. (category: Alternative Energy), International Business Machines Corp. (category: Technology), and Cisco Systems Inc. (category: Telecom/Internet).[3]


References

  1. Press Release. Dow Jones.
  2. Dow Jones Launches Economic Stimulus Index. Hedge Week.
  3. Stimulus Index Tracks Performance Of Companies Receiving U.S. Aid. Hedge Funds Review.