Stock Market Index

When you hear the newscaster report the “Dow Jones Industrial Average plunged 400 points,” he’s referring to what we call a stock market index. There are many stock indices, and the most famous ones in the United States are:

• Dow Jones Industrial Average (DJIA) — This index consists of 30 of the largest and most widely held public companies. It is the most cited and most widely recognized of the stock market indices
• S&P 500 — This index consists of the 500 largest corporations and is considered the barometer for the U.S. economy. It is most famous for the numerous index funds that are designed to match its performance, leading to indexing revolution of the recent years.
• NASDAQ Composite — This index consists of all common stocks and securities listed on the NASDAQ stock market. It is considered the key indicator of technology and growth companies performance.

There are many stock market indices from around the world, for example:

• British FTSE 100
• French CAC 40
• German DAX
• Japanese Nikkei 225
• Hong Kong Hang Seng Index