Foundations
A stock market index is a single number that tracks a basket of shares, so you can follow “the market” without watching thousands of individual companies. When headlines say markets rose today, they almost always mean an index did. The three you will meet constantly are the S&P 500, the Dow and the Nasdaq, and they are built differently enough that they often tell different stories on the same day.
The S&P 500: the benchmark
The S&P 500 tracks roughly 500 of the largest US companies, weighted by size (market capitalisation). Bigger companies move it more, which is why a handful of technology giants can drive the whole index. When professionals say “the market”, they usually mean this. Its level (say, 7,500) is just an accumulated score; what matters is the percentage change.
The Dow: the antique that will not die
The Dow Jones Industrial Average tracks just 30 large companies and, unusually, weights them by SHARE PRICE rather than company size, a quirk from its 1896 origins. A $500 stock moves the Dow more than a $5 trillion company with a $150 share price. It survives because of history and headlines, and because index changes (a company joining or leaving) are treated as a status signal for corporate America.
The Nasdaq: the growth barometer
The Nasdaq Composite covers thousands of companies listed on the Nasdaq exchange, skewing heavily to technology; the Nasdaq 100 tracks its largest non-financial names. Because tech firms’ profits sit further in the future, the Nasdaq is the most sensitive of the three to interest rates: it tends to lead on the way up in optimistic, low-rate times, and fall hardest when rates rise. When the Dow rises while the Nasdaq falls, that divergence is a story in itself: money rotating between kinds of company, which is often the real headline of the day.
Where you’ll meet this in our coverage
Alphabet Joins the Dow: What the Verizon Swap Really Signals
The Best Quarter Since 2020: Inside the H1 2026 Market Rally