1. Index Investing: Introduction
  2. Index Investing: What Is An Index?
  3. Index Investing: The Dow Jones Industrial Average
  4. Index Investing: The Standard & Poor's 500 Index
  5. Index Investing: The Nasdaq Composite Index
  6. Index Investing: The Wilshire 5000 Total Market Index
  7. Index Investing: The Russell 2000 Index
  8. Index Investing: Other Indexes
  9. Index Investing: Index Funds
  10. Index Investing: Conclusion

More than five thousand stocks trade every day on the New York Stock Exchange and Nasdaq  – the two largest stock exchanges in the U.S. With so many stocks moving and up and down throughout the trading session – and not all in the same direction, either – how is it that people can say whether the market has had a good day or a bad day?

It turns out, when people talk about the stock market’s performance, they are referring to a market index, such as the Dow Jones Industrial Average (DJIA), commonly called “the Dow,” or the Standard & Poor’s 500 – or S&P 500 for short. Each stock index measures the value of a unique section of the stock market. Some indexes measure very few stocks; the Dow, for example, is made up of just 30 stocks. Others contain thousands of stocks – 4,000 in the case of the Nasdaq Composite. 

Indexes provide a way to measure overall market sentiment, and investors can track changes in an index’s value over time and use it as a benchmark when evaluating their own portfolios. The S&P 500, for example, is the most commonly used benchmark for evaluating individual portfolios – as well as the overall economy of the U.S.

In this tutorial, we’ll take a closer look at some of the major stock market indexes and explain how you can invest in the stock market using index funds. (Need a stock market and mutual fund refresher? Check out our Stock Basics Tutorial and Mutual Fund Basics Tutorial before reading on.)


Index Investing: What Is An Index?
Related Articles
  1. Investing

    The Pros and Cons of Indexes

    Learn about the advantages and disadvantages of stock indexes and passive index funds. Discover how there is an opportunity cost to using index funds.
  2. Investing

    How Stock Market Indexes Changed Investing

    Find out how the first market averages were calculated and what they mean for investors today.
  3. Investing

    The Hidden Flaws of Index Investing

    Index investing isn't always better than active investing. Here's why.
  4. Investing

    The Lowdown on Index Funds

    If you can't beat the market, why not join it? Read on to see what your options are.
  5. Insights

    Key indicators for following the stock market and economy

    Learn about some of the key indicators analysts use to follow the U.S. stock markets and to assess the overall condition of the U.S. economy.
  6. Investing

    How to build your own mutual fund

    Creating your own mutual fund can help you avoid fees that cut into profits. Find out how in this primer.
  7. Investing

    ETF Tracking Errors: Protect Your Returns

    Tracking errors tend to be small, but they can still adversely affect your returns. Learn how to protect against them.
  8. Investing

    Understanding and Playing the Dow Jones Industrial Average

    In this article, learn strategies for investing in this price-weighted index (Dow Jones Industrial Average) and how to interpret its movements.
Trading Center