What is a stock market index?
A stock market index is the measurement of the value of a certain section of the stock market and is calculated from the prices of select stocks (varies by index), typical through a weighted average.
It is generally used as a tool by investors to describe or gauge the performance of the stock market.
Some popular indices are:
|Dow Jones Industrial Average||Is an average of 30 significant stocks traded on the NYSE or NASDAQ.|
|S&P 500 Index||Is based on the market capitalizations of 500 large companies listed on the NYSE or NASDAQ.|
|NASDAQ Composite Index||Is based on the market capitalization of the more than 3,000 common equities listed on the NASDAQ.|