The DJIA and the S&P 500 are just two measures
of market performance among dozens tracking different aspects
of the investing universe. These include bond market and mutual
funds indexes, as well as stock indexes — some of them national
and others international.
Depending on what they measure and how they measure
it, different
indexes
and
averages
convey different information about investment markets and the
economy.
Some measurements are very broad. The broadest
index, the
Wilshire
5000,
tracks most of the U.S. companies that are
publicly traded on organized exchanges and markets — currently
more than 6,500. Broad indexes provide the big picture but make
it hard to evaluate what’s happening in specific areas of
the market.
Some indexes are very narrow, such as the NASDAQ
Biotech, which follows biotechnology stocks traded on the NASDAQ
Stock Market, or the Dow Jones Utility Index, which follows 15
utility companies. They’re more precise measures within
a smaller range, but don’t reflect the market as a whole.
Other indexes are designed to show how different
categories of stocks — for instance,
growth
stocks or
value
stocks,
small
caps
or
large
caps
— are performing. These indexes may make
it easier to assess how the performance of an individual stock
relates to what’s happening in a specific market sector.
