An index is a collection of different stocks by a certain set of parameters. So when you hear stock market reporters saying, “the Dow is at blah-blah,” “the S&P 500 is at XYZ” and “the NASDAQ NDAQ +1.4% is at ladida level,” they’re talking about the three main indexes. The Dow Jones Industrial Average (or just “Dow”), for example, tracks the 30 biggest stocks in the U.S. including Apple AAPL -1.8%, Microsoft MSFT +2.2% and Disney DIS -0.4%. The S&P 500 is made up of 505 different large-cap companies, or companies with a value of more than $10 billion. All of the Dow companies are in the S&P 500 plus 475 more, making up 80% of the U.S. stock market by capitalization, or value.
