What is a stock index?
A stock index is a statistical measure of part or all of a stock market. They allows investors to gauge overall market performance and compare individual stock performance to the market as a whole. Some of the most well-known indices are the FTSE 100, S&P 500 and the Dow Jones Industrial average. In the UK the FTSE 100 is an index of the 100 largest companies listed on the London Stock Exchange (LSE). The index is managed by the FTSE group and each company receives a weighting which is calculated by using their market capitalisation.