Stock Index
An index tracks the combined performance of a defined basket of stocks.
A stock index measures the performance of a rules-based group of companies — the S&P 500 covers roughly the 500 largest US-listed companies, and the FTSE 100 covers the 100 largest on the London Stock Exchange. Most major indices are weighted by market capitalisation, so bigger companies move the index more.
Indices serve as market benchmarks and as the basis for index funds and ETFs. Membership changes periodically as companies grow, shrink, merge or delist.
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