What Is a Stock Market Index? Definition, Examples, and FAQ

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Stock indexes like the S&P 500 are used to gauge the movement of the stock market or a certain sector within it. 

Roberto Júnior via Unsplash; Canva

What Is a Stock Index? 

A stock index is a collection of stocks intended to be reflective of the stock market as a whole or, in some cases, a particular industry or segment of the market. In other words, a stock index can be thought of as a representative sample of the entire stock market or a particular segment or industry therein.

Stock indexes like the S&P 500 and the Russel 3,000 go up and down in value according to the weighted average price movements of their component companies. Investors look to stock indexes like these to see what’s going on with the market and to evaluate the performance of their own portfolios by using indexes as performance benchmarks. 

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