Definition

Noun: 1. A statistical measure: A stock index is a numerical indicator, calculated from the combined prices of a selected group of stocks. It is designed to represent the overall performance of a specific segment of the stock market, such as a particular industry, country, or market size. 2. A benchmark or gauge: It serves as a standard reference point against which the performance of individual investments or portfolios can be compared.

Usage Examples

• As a subject:
  • The stock index fell by 2% today due to economic concerns.
  • A major stock index is often used to summarize market trends.
• As an object:
  • Analysts closely watch the stock index for signals about the economy.
  • The fund is designed to track the performance of a specific stock index.

Advanced Usage

• "To track a stock index": Describes an investment fund or portfolio whose performance is designed to mirror the movements of a specific index.
  • Many exchange-traded funds (ETFs) are built to track a stock index like the S&P 500.
• "A stock index futures contract": Refers to a standardized agreement to buy or sell the value of an index at a future date and price.
  • Traders use stock index futures to hedge against market risk.

Variants and Related Words

• Market index: A more general term that can include indices for bonds, commodities, or other assets in addition to stocks.
• Index (in finance): The broader category to which a stock index belongs. Not all indices are stock indices.
• Stock market index: A full, synonymous term for 'stock index'.

Synonyms

• Equity index
• Share index (common in British English)
• Market benchmark

Related Phrases

• Broad-based index: An index that includes a large number of stocks across many sectors to represent the overall market.
  • The Wilshire 5000 is a broad-based index.
• Price-weighted index: An index where each component stock influences the index in proportion to its price per share.
  • The Dow Jones Industrial Average is a famous example of a price-weighted index.
• Capitalization-weighted index: An index where each component stock influences the index in proportion to its total market value (share price multiplied by shares outstanding).
  • The S&P 500 is a capitalization-weighted index.

Noun

1. index based on a statistical compilation of the share prices of a number of representative stocks