An indicator used to measure and report value changes in a selected group of stocks. How a particular stock index tracks the market depends on its composition the sampling of stocks, the weighing of individual stocks, and the method of averaging used to establish an index. Chicago Board of Trade glossary
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index like the Dow Jones Industrial Average that tracks a portfolio of stocks. Bloomberg Financial Dictionary
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A market index is a numerical representation of the way an entire market has performed relative to some 'base' reference date in the past. They are calculated in two ways - weighted or unweighted. Unweighted indices are simple arithmetic or geometric averages. An arithmetic average adds up all the percentage changes in the prices of the constituent stocks and then divides that by the number of stocks in the index. The geometric average is a very precise measurement, calculated by multiplying all the prices of the shares in the index and taking the nth root where n is the number of shares you are averaging. It is much less frequently used than an arithmetic average. In weighted indices, certain stocks carry a greater weighting than others, usually based on their market value or capitalization.
► See also Capitalization-weighted Index, Market Capitalization.
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stock index UK US noun [C] (also stock market index, also share index) FINANCE, STOCK MARKET
► a series of numbers that shows changes in the average prices of shares on a particular stock market over time: »
The Nikkei 225 stock index surged 2% last week
»The main stock index was down 350 points.
Financial and business terms. 2012.