Stock market indices measure the performance of selected groups of stocks. They can represent a country, region, industry or market segment. Investors use them to understand market trends and benchmark portfolio performance. An index level is a calculated measure—not the price of a single stock.
What are the major stock market indices worldwide?
Widely followed indices include the S&P 500, Dow Jones Industrial Average and Nasdaq-100 in the United States; the FTSE 100, DAX and CAC 40 in Europe; and the Nikkei 225, Hang Seng and S&P/ASX 200 in Asia-Pacific. Each tracks a different group of companies, so no single index represents every market.
What is the difference between the S&P 500, Dow Jones and Nasdaq-100?
The S&P 500 tracks 500 leading U.S. companies and uses float-adjusted market-cap weighting. The Dow tracks 30 U.S. blue-chip companies and is price-weighted. The Nasdaq-100 tracks 100 of the largest non-financial companies listed on Nasdaq. It is different from the broader Nasdaq Composite. Their different constituents and weights can produce different returns. S&P 500, Dow Jones, Nasdaq indices.
Can I invest directly in a stock market index?
No. An index is a benchmark, not an asset you can buy directly. Index mutual funds and ETFs offer indirect exposure by seeking to track an index’s returns. Their performance can differ from the benchmark because of fees, trading costs and tracking error. Index-linked derivatives are separate products with different risks.