Market Indices, Definition

If you open the financial pages of many newspapers, you will find a number of major market indices listed. Each of the indices tracks the performance of a specific "basket" of stocks considered to represent a particular market or sector of the U.S. stock market or the economy. For example, the Dow Jones Industrial Average (DJIA) is an index of 30 "blue chip" U.S. stocks of industrial companies (excluding transportation and utility companies). The S&P 500 Composite Stock Price Index is an index of 500 stocks from major industries of the U.S. economy. There are indices for almost every conceivable sector of the economy and stock market. Many investors are familiar with these indices through index funds and exchange-traded funds whose investment objectives are to track the performance of a particular index. See also: Dow Jones Industrial Average (DJIA), Dow Jones Transportation Average (DJTA), NYSE Composite Index, S&P 500 Composite Stock Price Index, Wilshire 5000 Total Market Index, Russell 2000® Index, Nasdaq-100 Index, AMEX Composite Index ($XAX)