What Does the Stock Market Level Mean?

Changes in stock market levels reflect many facets of the global economy.

Stock market levels correspond to the prices of stock market indexes. Global and national indexes exist to help investors assess investor confidence and market stability. U.S. stock levels may be compared to other leading markets by index comparison.

Dow Jones Industrial Average

The Dow Jones Industrial Average (DJIA) remains a popular way to discuss stock market levels. The Dow is one of the oldest stock indexes in the United States. Thirty "blue chip" companies comprise the index, and these companies do not change often. When the number rises or falls, the change in the Dow causes investors to consider fundamental reasons as well as market enthusiasm.

Standard & Poor's 500 Index

The Standard & Poor's 500 (S&P 500) tracks prices of 500 U.S. large-cap stocks. Originally devised in the 1950s, the S&P 500 is one of the most widely considered indicators of U.S. stock market levels. Because the index tracks a broad swath of U.S. companies, it is relied upon as an economic and market barometer.

New York Stock Exchange Arca Major Market Index

The New York Stock Exchange Arca Major Market Index (XMI) was originally developed by the American Stock Exchange (AMEX) in 1983. NYSE acquired AMEX in 2008. The XMI tracks 20 large capitalization "blue chip" U.S. companies. Some companies included in the XMI are also part of the DJIA.

References

• Money CNN.com: Stock Levels
• Dow Jones Averages.com: Dow Jones Industrial Average
• Standard & Poor's: S&P 500
• New York Stock Exchange: NYSE Arca

Resources

• "Beyond the Bull"; Ken Norquay; 2008
• "New Levels in the Stock Market"; Charles Amos Dice; 1929
• "Valuation: Measuring and Managing the Value of Companies"; Tim Koller; 2010
• CNS News: Major Market Indexes Fall to 1997 Levels