Market Index

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Dictionary Says

Definition of 'Market Index'

An aggregate value produced by combining several stocks or other investment vehicles together and expressing their total values against a base value from a specific date. Market indexes are intended to represent an entire stock market and thus track the market's changes over time.
Investopedia Says

Investopedia explains 'Market Index'

Index values are useful for investors to track changes in market values over long periods of time. For example, the widely used Standard and Poor's 500 Index is computed by combining 500 large-cap U.S. stocks together into one index value. Investors can track changes in the index's value over time and use it as a benchmark against which to compare their own portfolio returns.

Related Definitions

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    Standard & Poor's 500 Index - S&P 500

    An index of 500 stocks chosen for market size, liquidity and industry grouping, among other factors. The S&P 500 is designed to be a leading indicator of U.S. equities and is meant to ...
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  • Index Fund

    A type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor's 500 Index (S&P 500). An index mutual fund is said to ...
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  • Fundamentally Weighted Index

    A type of equity index in which components are chosen based on fundamental criteria as opposed to market capitalization. Fundamentally-weighted indexes may be based on fundamental ...
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    • Index Arbitrage

      An investment strategy that attempts to profit from the differences between actual and theoretical futures prices of the same stock index. This is done by simultaneously buying (or ...
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    • Composite Index

      A grouping of equities, indexes or other factors combined in a standardized way, providing a useful statistical measure of overall market or sector performance over time. Also known ...
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    • Weighted Average Market Capitalization

      A stock market index weighted by the market capitalization of each stock in the index. In such a weighting scheme, larger companies account for a greater portion of the index. Most ...
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    • Benchmark

      A standard against which the performance of a security, mutual fund or investment manager can be measured. Generally, broad market and market-segment stock and bond indexes are used for ...
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    • Portfolio

      A grouping of financial assets such as stocks, bonds and cash equivalents, as well as their mutual, exchange-traded and closed-fund counterparts. Portfolios are held directly by ...
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    • Price-Weighted Index

      A stock index in which each stock influences the index in proportion to its price per share. The value of the index is generated by adding the prices of each of the stocks in the index ...
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    • Capitalization-Weighted Index

      A type of market index whose individual components are weighted according to their market capitalization, so that larger components carry a larger percentage weighting. The value of a ...
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