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Global Stock Market Indices: The Complete Guide

Go through them in order below.

What Is a Stock Index?

A single number that combines the share prices of many companies to show how a market, or a slice of it, is moving overall. Because no one can track hundreds of individual stock prices at once, index providers select a group of stocks and apply a weighting method to combine them into one figure. Most index funds and ETFs are built to track a specific index like this.

S&P 500

A market-cap-weighted index of roughly 500 of the largest U.S. companies, and the most widely used benchmark for the overall U.S. stock market. It's calculated by S&P Dow Jones Indices and includes large, established U.S. companies that meet certain financial and liquidity standards. Most U.S. index funds and ETFs use it as their tracking target.

Nasdaq 100

An index of the 100 largest non-financial companies listed on the Nasdaq exchange. Because financial companies are excluded and the remaining companies skew toward large-cap Nasdaq names, it carries a noticeably heavier weighting in technology, internet, and biotech firms than the S&P 500.

Dow Jones Industrial Average

One of the oldest stock indices in the world, made up of just 30 iconic large U.S. companies. Unlike most other indices, it's price-weighted rather than market-cap-weighted, meaning stocks with a higher per-share price move the index more than stocks with a lower price, regardless of company size.

Russell 2000

An index of roughly 2,000 small-cap U.S. companies that tracks the overall U.S. small-cap market. Unlike the large-cap-heavy S&P 500 and Dow, it's made up of comparatively smaller companies, so it tends to react more sharply to shifts in the economic cycle.

Broad-Market Indices vs. Select/Blue-Chip Indices

Many markets run two versions of the same index family: a broad index covering nearly every listed stock, and a smaller select index covering only the largest, most liquid names. Japan's TOPIX (over 2,000 stocks) versus the Nikkei 225 (225 stocks) is one example, and mainland China's Shanghai Composite versus the narrower CSI 300 is another. The narrower select index is usually the one used as the underlying benchmark for futures, options, and ETFs, since its smaller number of highly liquid stocks makes it easier and cheaper to replicate.

Nikkei 225

Japan's best-known stock index, made up of 225 major companies listed on the Prime Market of the Tokyo Stock Exchange. Like the Dow Jones, it's calculated using a price-weighted method.

Other Major Indices Around the World

Hong Kong's Hang Seng Index, mainland China's CSI 300, and Europe's Euro Stoxx 50, DAX, and FTSE 100 are just a few of the benchmarks that represent individual countries and regions. Each is built from that market's leading listed companies, and investors anywhere can get diversified exposure to a country or region through an ETF that tracks it. Because the number of constituent stocks, weighting method, and rebalancing schedule differ from index to index, it's worth checking how an index is actually built before investing in something that tracks it.

How index investing actually works

Investing 'in an index' almost always means buying an index fund or ETF built to replicate one of these benchmarks as closely as possible, rather than buying every underlying stock yourself. Because the fund's return is designed to move in step with the index rather than beat it, the appeal is broad, low-cost diversification in a single trade -- which is also why so many long-term retirement portfolios lean on a small handful of index funds rather than picking individual stocks.

Index composition changes regularly -- and this isn't investment advice

The number of constituents and calculation method described here reflect each index's general structure; index providers regularly rebalance which stocks are added or dropped and adjust the detailed rules over time. For the exact, current composition of any index, check the official materials published by its provider (S&P Dow Jones Indices, Nasdaq, the relevant stock exchange, and so on). This page is general educational content, not investment advice -- market indices and the products that track them carry investment risk, so do your own research or consult a licensed professional before investing.

Frequently Asked Questions

What's the difference between a price-weighted index and a market-cap-weighted index?

A price-weighted index, like the Dow Jones or Nikkei 225, gives more influence to stocks with a higher per-share price, regardless of the company's total size. A market-cap-weighted index, like the S&P 500, instead gives more influence to companies with a larger total market value. Most modern indices use market-cap weighting because it better reflects each company's actual economic size.

Is there a way to track several indices at once?

Yes -- global indices like the MSCI All Country World Index (ACWI) combine stocks from dozens of countries into one benchmark, and investing in an ETF that tracks an index like this spreads your money across many markets in a single purchase.