Learning to take stock of market indexes
Stock indexes measure price fluctuations among stocks. By following the appropriate stock market index, you can compare the performance of your stocks to similar types of stocks within a particular index.
• The Dow Jones Industrial Average — The Dow Jones Industrial Average (DJIA)* is the figure most often referred to on the news when the market’s daily activity is recapped.
The DJIA is a price-weighted index of 30 major companies, such as McDonald’s, Walmart and General Electric. As a result, high-priced stocks have much more of an influence on the index than low-priced stocks.