1. What Is a Market Index?
A market index tracks the combined performance of a defined group of stocks, distilling thousands of individual price moves into a single number. When you hear "the market was up today," it usually refers to an index.
Indexes serve as benchmarks — yardsticks investors use to measure how their own portfolios and individual stocks are performing relative to the broader market.
2. The S&P 500
The S&P 500 tracks about 500 of the largest U.S. companies and is the most widely followed gauge of the American stock market. It covers roughly 80% of total U.S. market value.
How it's weighted: The S&P 500 is market-cap weighted, so the biggest companies carry the most influence. A handful of mega-cap firms can move the whole index, as explained in our market cap guide.
3. The NASDAQ
The NASDAQ Composite includes thousands of stocks listed on the NASDAQ exchange, but it's best known for its heavy weighting in technology companies.
Because of that tech tilt, the NASDAQ tends to be more volatile than the S&P 500 — rising faster in tech-led rallies and falling harder when technology stocks retreat.
4. The Dow Jones Industrial Average
The Dow tracks just 30 large, well-known U.S. companies. It's the oldest and most famous index, but also the quirkiest.
A different method: The Dow is price-weighted, meaning higher-priced stocks have more influence regardless of company size. This makes it a less representative measure than the market-cap-weighted S&P 500.
5. Why Weighting Matters
Market-Cap Weighted
Bigger companies count more (S&P 500, NASDAQ). Reflects where real money is invested, but concentrates influence in a few giants.
Price-Weighted
Higher-priced shares count more (Dow). A $400 stock sways the index more than a $40 stock, even if the smaller-priced company is larger.
Understanding the weighting method explains why indexes can tell different stories on the same day — one may rise while another falls.
6. Tracking Indexes on WIT
WIT displays the major indexes in real time:
- Watch the S&P 500, NASDAQ, and Dow on the dashboard for the overall market direction.
- Compare index moves to spot whether tech (NASDAQ) or the broad market (S&P) is leading.
- Use them as a benchmark for judging how individual stocks in your watchlist are performing.