Understanding CNBC Financial Terminology
Do you watch the market news on CNBC television? They have various shows running throughout the day such as Squwak Box, Fast Money, Closing Bell, Power Lunch and etc.
Each of these shows, during Monday through Friday, run stock tickers of various kinds showing what is going on in the market.
Now that we are retired, my spouse and I tune in at various points in the day to see what the ‘talking heads’ (what we call the anchor people and their guests) are saying, as well as how the market is trending. I have to say at this point, that I’ve heard it is not beneficial for individual investors to base decisions on what these shows are providing, as their purpose is to get readers and to do that they always have to provide the latest and hottest information – not always the most analytical or meaningful to individual investors.
That said, my husband and I sometimes stop and scratch our heads about what some of the various tickers really are.
So, for our own benefit, I have done a bit of research and will share that with you in this post. Seasoned traders, please let me know if there are corrections needed!
This is one of those long (somewhat boring) information pages that are good to refer back to when needed, so feel free to bookmark it for future use.
Rotating at the top of the screen.
One band displays at the top of the screen, but it rotates through a new banner every few seconds to show different things. The various banners that rotate are listed below. Unless otherwise noted, each is followed by numbers showing the current value and change – positive in green, negative in red.
Two of the banners show the current status of various stock market indices.
- S&P DOW NAS
- RUS 2K S&P RETAIL DJUTILITY
One of them shows the current status of commonly traded currencies.
- YEN EURO POUND
Three show the status of certain commodities/futures.
- OIL GAS H. OIL
- OIL GAS NAT GAS
- GOLD SILVER COPPER
One of them shows the status of future’s indices.
- S&P VIX NAS VIX Oil VIX
Four of them display information about interest rates with a rate and a percent for each item in each banner.
- 1 mo 3 mo 6mo
- 2 Yr 5 Yr 10 Yr
- 5 Yr 10 Yr 30 Yr
- LIBOR O/N LIBOR-1 month LIBOR-3mo – each one has a rate and a percent.
Below are more in depth explanations of what we see on the CNBC business trading day screen.
Stock market indices status
Banner: S&P DOW NAS
Standard and Poor 500 (S&P)
This index consists of 500 large cap US stocks that trade either on the NASDAQ exchange or the NYSE. It has been around since 1957. Some say it is the second most followed index (after the DOW).
Dow Jones Industrial average (DOW).
Named after founder Charles Dow (Wall Street Journal Editor) and Edward Jones (an associate of Dow and a statistician), this stock market index shows how 30 large public US companies trade during the day.
The number you see (eg 12,369.38) is the price for each company stock included in the DOW added together and the sum of them divided by the ‘dow divisor’ – a number that adjusts for things like stock splits and dividends.
Nasdaq Composite Index (NAS).
The ‘Nasdaq’ is actually two different things – an exchange where you can trade (National Association of Securities Dealers Automated Quotations) and a measure of market activity (Nasdaq Composite Index).
The Nasdaq Composite tracks approximately 4,000 stocks, all of which are traded on the Nasdaq exchange. It is the second-largest stock exchange in the United States, in terms of the value of its securities, trailing only the New York Stock Exchange (NYSE). Many of the world’s largest technology companies appear on the NASDAQ, including Amazon, Apple, Cisco, eBay, Google, Intel, Microsoft, and Sun.
It was started in 1971 and has always been an electronic exchange (starting with simple computer bulletin boards).
Banner: RUS 2K S&P RETAIL DJUTILITY
Russell 2000 (RUS 2K)
The Russell 2K index is designed to measure 2000 of the smallest cap stocks and is meant to be a barometer of the small cap environment.
Standard and Poor Retail index (S&P RETAIL)
This index is composed of high capitalization stocks in the S&P 500 that are in the retail sector.
Dow Jones Utilities Average (DJ UTILITY)
This number is the price weighted average (the price of each stock is added to the sum and the sum is divided by the total number of stocks) of 15 utilities companies. It is seen as an indicator of rising or falling interest rates because utilities borrow a lot of money and their profits increase when interest rates decrease.New York Stock Exchange (NYSE)
This is the largest (8000 issues), oldest and the first international exchange. To list on this exchange, a company must fulfill a long list of requirements.
For more on the history of exchanges see Wall Street, Understanding Stock Market Exchanges.
Currencies
Banner: YEN EURO POUND
Yen – currency of Japan. It is the third largest most traded currency (after the dollar and the euro) and is used as a reserve currency after the dollar, Euro and Pound. Reserve currency is money (dollars, euros, pounds, yen) held by countries or institutions as a foreign exchange, as well as a currency in which to price products sold around the world.
Euro – currency of the Eurozone (18 European countries – Austria, Belgium, Cyprus,Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain ). It is the second largest reserve currency (after the dollar) as well as traded currency (also after the dollar).
Pound – currency of England and its’ Crown dependencies and its’ overseas territories. It is the fourth most traded currency and the third largest reserve currency. It is also known as Pound Sterling.
Futures/Commodities
Although I list these separately, they are traded as future contracts not as actual products! Except that gold, silver and cooper are also traded as products.
Banner: OIL GAS H. OIL
Oil – petroleum – is priced by the barrel (159 liters or 42 gallons).
GAS – I’m not sure what this one really is – it is NOT the price of gasoline at my local station and it is not the price of natural gas. I believe it may refer to “Reformulated Gasoline Blendstock for Oxygen Blending” (RBOB GAS). According to Doodlebugs: “RBOB GAS is the raw ingredient that is used to make different kinds of gas such as that sold in California or high altitudes like Denver. RBOB gasoline prices as traded on the commodities (futures) exchange are roughly what your local regular gas prices are less taxes”. Readers – help me out with this one!
H. Oil – Heating oil futures, priced in US dollars and cents per gallon.
Banner: OIL GAS NAT GAS
Oil – same as above.
GAS – same as above.
NAT GAS – natural gas futures are priced in US dollars and cents per MMBtu – one million British Thermal Units (BTU). This (in case you forgot from school lessons) is how much heat you need to raise the temperature of a pint of water to 1 degree Fahrenheit.
Banner: GOLD SILVER COPPER
GOLD – the price of a troy once of gold in US dollars and cents.
SIVLER – the price of a troy once of silver in US dollars and cents.
COPPER – the price for a pound of copper in US dollars and cents.
Futures/VIX
VIX is the symbol for the Chicago Board Options Exchange Volatility Index – commonly referred to as the ‘fear’ index. It measures the implied volatility of stocks in the S & P 500 for the next 30 days. It often moves in counterpoint to the S&P. The numbers you see are percentage points of the annualized expected volatility for the next 30 days.
Banner: S&P VIX NAS VIX OIL VIX
S&P VIX – According to the Standard and Poor’s website, “The S&P 500® VIX Futures Index Series is a suite of investable indices that offers investors directional exposure to volatility through publicly traded futures markets, and seeks to model the outcome of holding a long position in VIX futures contracts.”
NAS VIX – I couldn’t find anything on this that actually explains what it is – readers do you know? Common sense implies that it is a futures index for stocks on the NASDAQ – but who knows??
OIL VIX – According to a 2008 article on CNBC.com This is a “Chicago Board Options Exchange introduced the Crude Oil Volatility Index, or OVX. The gauge is the energy counterpart to the CBOE’s closely watchedVolatility Index”.
Interest Rates
Banner: 1 MO 3 MO 6 MO
This banner displays the price and yield of US Treasury Bills. A treasury bill is a short term debt obligation of the US Government for the term specified. They are (or were at least) considered the safest investment that can be made.
Banner: 2 YR 5 YR 10 YR
This banner displays the price and yield of US Treasury Notes. A treasury note is an obligation of the US government that pays a fixed rate of interest every 6 months.
Banner: 5 YR 10 YR 30 YR
This banner also displays the price and yield of 2 year and 5 year US Treasury Notes, but adds the price and yield of a 30 year Treasury Bond. A treasury bond is an obligation of the US government that pays a fixed rate of interest every 6 month until maturity. They are only sold in 30 year denominations.
Banner: LIBOR O/N LIBOR-1 mo LIBOR-3 mo
Each one of these banner items has a rate and a percent.
The Libor is the average interest rate that leading banks in London charge when lending to other banks. It is an acronym for London Interbank Offered Rate. O/N stands for overnight.
Along the bottom of the screen
There are two bands that run along the bottom of the screen. They imitate the old style ticker tapes and show the price of individual stocks. The symbol and the current price of the company is displayed, followed by a number representing the change amount with an arrow pointing down (red) or up (green) to indicate which way the price has moved.
Upper band
During market hours the upper band shows New York Stock Exchange (NYSE) listed companies with high trading volume today. It also displays other things at certain times, like a market summary and a commodity summary.
Lower band
The lower band shows the same information for stocks in the National Association of Security Dealers Automated Quotations composite (NASDAQ) index and or the American Stock Exchange (AMEX) index.
If you have made it this far I applaud you! Which of these statistics do YOU care about? If you had a few cool million, which ones SHOULD you care about?
Resources used:
- http://en.wikipedia.org/wiki/CNBC_Ticker
- http://www.cnbc.com/id/41585735/
- http://www.wisegeek.com/what-is-nasdaq.htm
- http://www.investopedia.com/ask/answers/03/072403.asp#ixzz1vMYWL9oS
- http://www.analyzeindices.com/ind/retailers.htm
- http://www.standardandpoors.com/indices/sp-500-vix-futures-index-series/en/us/?indexId=sp-500-vix-futures-index-series
- http://www.cboe.com/
- http://www.cnbc.com/id/25704444/New_Oil_Vix_Lets_Investors_Bet_On_Market_s_Volatility
