Stock Index
A stock index tracks the combined value of a selected group of companies, giving a single number that represents how that slice of the market is performing.
An index is a measuring instrument, not something you can own directly. The S&P 500 follows 500 large US companies, the Nikkei 225 follows Japanese blue chips, and the SET Index follows companies listed in Thailand. Each has its own rules about which companies qualify and when the list is reviewed.
Weighting determines how much influence each member has. Market-cap weighting, the most common approach, gives the largest companies the most sway. Price weighting, used by the Dow Jones and Nikkei, gives the highest-priced shares the most influence regardless of company size. Equal weighting treats every member the same.
Indices act as benchmarks. Fund managers are judged against them, and index funds and ETFs are built to replicate them. When people say "the market was up today," they almost always mean a specific index rather than every listed company.
Index composition changes over time as companies are added and removed. Because index funds must hold what the index holds, inclusion or removal can itself move a share price — an effect entirely separate from the company’s underlying performance.
TrustFinance News covers the major indices in its live market data, tracking both the benchmarks and the companies moving them.