A stock index is a specific group of stocks. Whether its value is up or down reflects the combined price movements of all of the stocks in the index.
The stock market reports its moves through a variety of indexes because no single index tells investors everything they need to know.
Widely cited indexes include:
- Dow Jones Industrial Average - tracks the stock prices of 30 key “blue-chip” companies;
- Standard & Poor's 500 - commonly referred to as the S&P 500 - which combines the stock prices of 500 large company stocks; and NYSE Composite Index, which includes all common stocks traded on the New York Stock Exchang
- The NYSE Composite Index - the only major measure that reflects the whole NYSE market. It's supplemented by separate indexes for four industry groups: industrial, transportation, utility, and finance.