An index reports changes, usually expressed as a percentage, in a specific financial market, in a number of related markets, or in the economy as a whole. Each index -- and there are a large number of them -- measures the market or markets as it tracks from a specific starting point, which might be as recent as the previous day or many years in the past. That's one reason two indices tracking similar markets may report different numbers.
Indices are statistical measures of change in the economy or financial markets. A stock index, for instance, would measure change in selected stock prices.
The stock exchange's own groupings of companies. May be grouped by market cap (FTSE 100), business type (Techmark) or some other parameter.
A statistical measure of the changes in a portfolio of stocks representing a portion of the overall market.
In relation to a stock exchange, calculations made on an index number basis to indicate the movements in the general level of prices of securities listed on that stock exchange ( Refer to section on indices for further information).
In order to understand what is happening in stock markets, stock price averages have been devised known as indices. Among the most famous are the Dow Jones 30 share index measuring the performance of US shares and its counterpart, the now little followed, FT 30 share index. There are now myriads of indices allowing for detailed monitoring of stockmarket trends and performance benchmarking. Some indices like the Dow Jones 30 are unweighted. More indices, though, are weighted in order to give more influence to price movements in the larger companies. Changes in the price of Vodafone, for example, have a significant influence on the performance of the FTSE100 index.
Click Dow Jones Indices and S&P Indices in the Glossary list for these definitions.
A benchmark, such as the S&P 500 or the Russell 2000, against which investors measure a security's performance or valuation.
