Function

• A stock market index tracks the value and price changes of a specific group of stocks. The broad based indexes provide investors with a picture of how the market is doing during the trading day and over time.
  
  

Identification

• The most widely followed stock market index is the Dow Jones Industrial Average. It may also be referred to as the Dow, Dow Jones or DJIA. The DJIA tracks the price change of 30 major U.S. industrial companies.
  
  

Considerations

• Serious investors often keep a closer eye on the S&P 500 and NASDAQ 100 indexes. The S&P 500 tracks the 500 largest publicly traded companies in the U.S. and the NASDAQ 100 provides a tracking of the largest technology stocks.
  
  

Types

• Besides the broad U.S. market indexes there is a host of stock market indexes that track other markets or sectors. Some popular indexes show the values for European and Chinese stocks, emerging market stocks and specific market sectors like energy and financial stocks.
  
  

Misconceptions

• Investors cannot invest directly in the market indexes unless they have enough money to buy hundreds of stocks in the correct proportion. However, there are numerous mutual finds and ETFs that track a wide range of stock market indexes that investors can buy.