Glossary · Defined term
Index
An index is a statistical measure tracking a group of securities that represents a market segment, like the S&P 500.
Last updated Oct 2, 2026
What it means
An index is a statistical measure that tracks the performance of a group of securities representing a market segment. The S&P 500 follows 500 large U.S. companies, the Dow Jones Industrial Average follows 30 blue chips, and the Nasdaq Composite covers the Nasdaq exchange broadly. Most major indexes are weighted by market capitalization, so the largest companies influence the index most. Indexes serve two roles: they are benchmarks for judging investment performance, and they are the blueprints that index funds and ETFs copy. When news reports say the market was up, it usually means a major index rose.
An example
For illustration, if the five largest stocks in a market-cap-weighted index surge while the other 495 fall, the index can still rise because the giants dominate the calculation. That is why an index can hit a record high even when most of its component stocks are struggling.