Stock market index

A statistical measure of the performance of a selected group of publicly traded stocks. Its value summarizes a market or segment using a defined selection and weighting method.

Market capitalization weighting: An approach that assigns assets weights in proportion to their total market value. It gives larger companies greater influence in indexes such as the S&P 500.
Index fund: A mutual fund or exchange-traded fund designed to track a market index. It turns an index's rules into a portfolio intended to deliver similar returns.
S&P 500: A U.S. stock index of 500 leading companies selected by a committee. It is a widely used benchmark for large-capitalization U.S. stocks.
Individual stock: A security representing an ownership interest in a single company. An index aggregates selected stocks rather than measuring one company's shares.
Passive investing: An investment strategy that seeks market returns rather than selecting securities to outperform them. Index tracking is a central way investors implement passive strategies.
Price-weighted index: A stock index in which each constituent's influence is proportional to its share price. Unlike capitalization weighting, it gives higher-priced shares more influence regardless of company size.
Exchange-traded fund: An investment fund whose shares trade on an exchange throughout the trading day. Many ETFs track stock indexes, giving investors tradable exposure to their constituents.
Dow Jones Industrial Average: A price-weighted U.S. stock index of 30 prominent companies. Its unusual price weighting makes it a clear example of an index design choice.
Stock market average: A summary statistic formed by averaging stock prices or returns. The phrase overlaps with index, but an index may use weighted calculations rather than a simple average.
Index effect: A change in a security's price or trading activity associated with its addition to or removal from an index. Index inclusion can prompt purchases or sales by funds that track the index.

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