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The US Stock Market Index: An Overview

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Created on
March 27, 2023


What’s Inside

The US Stock Market Index measures the share price changes of companies listed on the US stock exchange. 

Dow Jones Industrial Average, NASDAQ Composite, and S&P 500 are popular indices in the United States. These indices indicate the state of an economy to the investors. So, if you want to conduct trading activities in the US stock exchange, these indices can prove helpful in calculating market performance.

The ABC of the US Stock Market Index

Market indices use a weighted mean calculation to evaluate stock segments. There are approximately 5,000 indices in the US. 

The American Stock Market Index has distinct weight models that help determine the performance of specific stocks. Here are the main models:

  • Equal weighted index: This model considers every company and its performance the same. It does not distinguish based on the size of the enterprise
  • Market-cap-weighted index: Large companies considerably impact performance in this indexing method. This model represents high market cap stocks and shares
  • Price-weighted index: Each stock's current share price influences the overall segment's performance. You can use this model to calculate the average stock price of a sector or industry

Indexes like the S&P 500, Dow Jones Industrial Average and Wilshire 500 offer a picture of the US equity market’s condition. 

Major Types of US Stock Index

The major indices offer insights into the entire stock market. However, other indices are domain-specific and relate to certain segments.

  • S&P 500
  • Dow Jones Industrial Average
  • Nasdaq Composite
  • S&P 100
  • Russell 1000
  • S&P MidCap 400
  • Russell Midcap
  • Russell 2000
  • S&P 600
  • U.S. Aggregate Bond Market
  • Global Aggregate Bond Market

So, the American Stock Market Index has different options that you can explore.

Popular US Stock Indexes

1. S&P 500

Short for Standard & Poor’s 500, this index covers America’s top 500 companies. Here are the main factors that influence the performance measurement in this well-known American Stock Market Index:

  • Capitalisation
  • Trading history
  • Sector
  • Liquidity

The index follows the market cap-weighted model.

2. Nasdaq Composite

This index covers all the stocks listed on the Nasdaq stock exchange. It focuses predominantly on technology companies. So, you can expect details on sectors like semiconductors, green energy, information technology, and many more.

Notably, the index covers almost all scales of companies, including speculative stocks. 

3. Dow Jones Industrial Average

This index includes the top 30 large companies in the United States. It follows a price-weighted index model and can prove helpful in providing a picture of the dividend-value market.

It is important to note that the companies in this index can undergo addition or removal at different stages. So, this US Stock Indexrequires you to pay close attention to the periodic changes. 

4. The Wilshire 500

The Wilshire 5000, also known as the "total stock market index" or "total market index," encompasses all publicly traded U.S.-based companies with easily accessible price information. Established in 1974, it serves as a comprehensive reflection of the collective performance of the U.S. stock market.

Summing Up

The US Stock Market Index has around 5,000 indices. They help reveal the performance of stocks by using various measurement models.

Notably, three index models, equal-weighted, market cap-weighted, and price-weighted, help determine the stock market's performance. So, as an investor, you should know the basics of these models to understand their significance.

For insights on the US stock exchange and economy, follow indexes like S&P 500, Nasdaq Composite, and Dow Jones Industrial Average. Also, explore more about stock market investing on Fi Money — your one-stop destination for all financial information.

Frequently Asked Questions

1. What is the India VIX index?

India VIX index refers to the volatility index. The India VIX index denotes the perception of investors towards market volatility. A high India VIX index implies a greater probability of market volatility.

2. What are the major stock indexes?

Some major stock indexes are S&P 500, the Wilshire 500, Dow Jones Industrial Average, Nasdaq Composite, and Russel Indexes.


Investment and securities are subject to market risks. Please read all the related documents carefully before investing. The contents of this article are for informational purposes only, and not to be taken as a recommendation to buy or sell securities, mutual funds, or any other financial products.
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