Stock index
A basket of stocks used to track a market.
Indices like the S&P 500 and the Nasdaq measure how a group of companies is performing, giving a quick read on the market as a whole.
A stock index bundles many companies into one number so you can see how a whole market or sector is doing at a glance. The S&P 500 tracks 500 large US companies, the Nasdaq leans toward technology, the Dow follows 30 big names, the FTSE 100 covers the largest London-listed firms. Most serious indices are weighted by market cap, so the biggest companies move the number most.
Traders use indices two ways: as a read on overall risk appetite, and as something to trade directly through futures or ETFs. Because an index spreads across many companies, a single bad earnings report barely dents it, which makes index exposure less jumpy than any one stock. When people say the market was up today, they almost always mean an index.