Stock Market Index

Definition

In finance, a stock index, or stock market index, is an index that measures a stock market, or a subset of the stock market, that helps investors compare current price levels with past prices to calculate market performance. It is computed from the prices of selected stocks (typically a weighted arithmetic mean).

Two of the primary criteria of an index are that it is investable and transparent: The methods of its construction are specified. Investors can invest in a stock market index by buying an index fund, which are structured as either a mutual fund or an exchange-traded fund, and "track" an index.

Global Stock Market Indices

Large companies not ordered by any nation or type of business.

Regional Stock Market Indices

Such as MSCI EAFE Index, which is a stock market index that is designed to measure the equity market performance of developed markets outside of the U.S. & Canada.

National Stock Market Indices

Equity indices ordered by nationality of companies.