What Is a Stock Index?

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A stock index is any index that tracks a particular group of stocks or a certain market in order to give an indicator of how that section of the market is doing. Look at a stock index that shows a broad view of the market, such as the S&P 500 of the Dow Jones, with advice from an investments manager in this free video on the stock market.

Part of the Video Series: Stocks, Bonds & Investments
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Video Transcript

O.k., What is a stock index? A stock index is any index that tracks a particular group of stock or a certain market. So a stock index might be the S and P Five Hundred which are five hundred companies that are tracked by standard importers. And the index really is supposed to be a good indicator of what the market is doing or what a section of the market is doing. So you may see a stock index that's based around health sciences. You may see one that's technology based, you may see one that's financial services based and what they're doing is giving you a rough idea an average of what all those companies and those different groups are doing in the market. Are they up are they down, how much are they expected to go up or down this year. And if you look at an overall index such as S and P Five Hundred, the you know, Dow Jones. You're looking at a much broader view or diversified portfolios and looking at what the market overall will do. And those are the most common to see so people are saying, is the market up or down, they're usually looking at the S and P Five Hundred index or the Dow Jones index and again those are just tracking methods to give a model for roughly what the market overall is doing that day.

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