Watch the nightly news and you’ll hear a reporter talk about the market being up or down a certain number of points for the day.  What the reporter is referring to is the best known index of stock performance, the Dow Jones Industrial Average.  The Dow tracks the price movement of the stocks of 30 large, established companies listed on the New York Stock Exchange.

There are other well-known indexes like Standard and Poors’ 500 Index, which measures price movement of 500 exchange listed stocks, and the NASDAQ Composite, which measure movement of stocks traded over a computer network rather than on the floor of an exchange.  None, however, are quoted as often as the Dow.

Although past performance is not a guarantee of future results, indexes provides an historical perspective that may give clues about what the market may do next and what affects a stock’s price.  You can compare an individual stock’s performance to an index.  Over time, if the stock has not performed as well as the index, you might decide to reassess your investment objectives.