Stock Indices

A stock index is a measurement of the performance of a group of stocks, representing a specific sector, market, or region. It tracks the combined value of the selected stocks and gives a snapshot of the overall performance of a market. If a major index is going up, it generally indicates that the market or sector is performing well, and vice versa.

For example, well-known stock indices include:

• S&P 500: tracks the performance of 500 large U.S. companies;
• Dow Jones Industrial Average (DJIA): represents 30 major U.S. companies;
• NASDAQ Composite: includes over 3,000 companies, mostly in technology;
• FTSE 100: tracks the 100 largest companies on the London Stock Exchange.

Stock indices provide investors with a snapshot of market trends and can be used to make decisions about investing or trading. While they can not buy a stock index directly like a single stock, they can invest in exchange-traded funds (ETFs) or mutual funds that track these indices.