Intro To The U.S. Stock Market For Beginners

Understanding The Stock Market

When people say that there is an incline or decline in the stock market, they refer to a market index. A market index is what tracks the performance of stock groups. It indicates the health of the entire or section of the market at any given time.

Investors use indices as an indicator of their portfolio performance. The most common indices you’ll hear about are the Dow-Jones Industrial Average, Nasdaq Composite, and S&P 500. These are often used as proxy indicators for the market’s overall performance.

Investors also use indices to make trading decisions. Index funds and exchange-traded funds (ETFs) are good ways to invest in an entire index. You can also use it to track a specific index or sector of the market.