What is Stock index?
Also known as: stock market index
An indicator that combines the prices of a selected group of shares into a single number and shows whether the market, or part of it, is generally rising or falling. Indices differ in composition and calculation method: in a price-weighted index an expensive share has more influence, while in an index weighted by market capitalisation (price × number of shares) a large company does. For example, Britannica describes the Dow Jones Industrial Average as based on the prices of the shares of 30 industrial companies, and the S&P 500 as capitalisation-weighted and the chief benchmark of the US market. An index measures not an individual share but the general mood.
Source: Britannica: Dow Jones Industrial Average; Britannica Money: Dow Jones average; Britannica Money: S&P 500