There are a myriad of market indices, and it may seem like they are all measuring the same thing.

2. Every day we hear numbers that evaluate the stock market's
performance, such as the Dow Jones Industrial Average or
the NASDAQ Composite Index. There are a myriad of
market indices, and it may seem like they are all measuring
the same thing. However, each index evaluates the market
in a different way.

3. Dow Jones Industrial Average (DJIA)
While the DJIA is often used to represent how the stock
market is performing as a whole, the index is made up of
only 30 large company stocks. Despite its name, the index
is composed of more than just industrial companies. The
index includes long established entities like General
Electric and 3M as well as newer firms, such as Apple,
Nike and VISA. The components of the index change from
time-to-time, but it always includes stocks that are among
the largest in the market. However, given that the index
represents the performance of a very limited number of
stocks, it may not signify what is happening in the broader
market. The DJIA's value is calculated by adding up the
price of all 30 stocks and then dividing it by a specific
measure created by Dow Jones.

4. Standard & Poor's (S&P) 500
Another reading of large company stock performance comes
from the S&P 500 index. Many in the financial industry
consider this a more accurate measure of broad market
performance than the DJIA because it includes a much
larger group of stocks. The index is made up of
approximately 500 of the largest companies in the U.S.
(currently, there are actually 504 stocks in the index). This
is a "capitalization-weighted" index, meaning that price
movements among larger stocks will have more impact on
the index than price moves among smaller components in
the index. However, the S&P 500 does not account for mid-
cap or small-cap stocks' performance.

5. NASDAQ Composite
Companies that trade on a global electronic marketplace first
established by the National Association of Securities
Dealers (NASD) are included in this index. More than 3,000
common equities are listed on the NASDAQ exchange,
including stocks, American depository receipts (ADRs) and
real estate investment trusts (REITs). Some companies
may be located outside of the U.S. The index's composition
is largely made up of technology companies, so the
performance of that industry can greatly influence the
index. Like the S&P 500, the NASDAQ Composite is
calculated using a market-cap weighting, with the 100
largest stocks accounting for most of its movement.

6. Resources:
http://www.affordablestock.com
http://ezinearticles.com/?Measuring-The-Stock-Market&id=9341145

7. Resources:
http://www.affordablestock.com
http://ezinearticles.com/?Measuring-The-Stock-Market&id=9341145