5. Stock Market Indexes
You may come across names like the S&P 500 and the Dow Jones Industrial Average when you learn about the stock market (DJIA). These are stock market indices that help to describe a market’s success as a whole or a particular piece of the market.
For instance, the S&P 500 lists the 500 largest US publicly traded stocks. It’s a market-cap-weighted index, meaning larger firms account for larger index shares.
Founded in 1896 by Charles Dow and Edward Jones, the DJIA is a price-weighted average, meaning stocks influence the index in proportion to their price per share. The DJIA keeps track of 30 large, publicly-traded US-based stocks. It was designed as a proxy for the overall economy. So, when you hear a news anchor say that markets were “up” or “down” on a given day they are likely referring to the DJIA