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An arithmetic mean return of selected stocks intended to represent the behavior of the market or some component of it. One good example is the widely quoted Dow Jones Industrial Average, which adds the current prices of the 30 DJIA stocks, and divides the results by a predetermined number, the divisor.

Average (across-day) measures

An estimation of price that uses the average or representative price of a large number of trades.
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A simple way to calculate the relative price of an index of stocks that involves adding the prices of all the stocks in the index and dividing by the total number of stocks. Market averages may be weighted, for example, for price or market capitalization. Movements in the market average of an index are considered a way to observe trends in the health of the companies represented in it. Some market averages are taken as an indicator of health in the broader economy; prominent examples of this include the Dow Jones Industrial Average and S&P 500 indices.
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See averages.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


A stock market average is a mathematical way of reporting the composite change in prices of the stocks that the average includes.

Each average is designed to reflect the general movement of the broad market or a certain segment of the market and often serves as a benchmark for the performance of individual stocks in its sphere.

A true average adds the prices of the stocks it covers and divides that amount by the number of stocks.

However, many averages are weighted, which usually means they count stocks with the largest market capitalizations more heavily than they do others. Weighting reflects the impact that the stocks of the biggest companies have on the markets and on the economy in general.

The Dow Jones Industrial Average (DJIA), which tracks the performance of 30 large-company stocks, is the most widely followed market average in the United States.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Make sure you keep up to date with the market average price.
International demand grew 18.1% in June 2009 compared to June 2008, while international supply was up 25.5%, resulting in an international load factor of 68.3%, 2.8 percentage points above the market average of 65.5%.
"Online fraud via HSBC's internet banking system is substantially lower than market average and we are satisfied our customers are adequately protected."
"However, it also makes it clear a market average just short of 250p is also needed to compensate for the removal of coupled subsidy and secure ex-farm production at the level needed to maintain current levels of slaughter sector throughput.
The 5.3% drop to GBP98.6m has been blamed on problems with a new ordering system during the 2002 Christmas period, but the company said that Christmas 2003 was strong, with a rise of 7%, which is above the market average.
It shows that over a 20-year period, the returns on investments in commercial property in deprived areas have exceeded the market average.
The market average for men's shirts in Japan is 50 million shirts per year.
In most categories, IRI reports, supercenters are keeping pace with the overall market average for the amount consumers spend per purchase occasion.
While the company grew well ahead of the overall US market average, its results were plagued by sluggishness in the corporate PC sector.
The report indicates that, with demand exceeding supply by a wide margin, the South Bay market closed 1999 with 6.6 million square feet of sales and leasing activity--substantially below the market average of 10 million to 12 million square feet a year.
ISS also holds a 43% share of the combined IdnA solutions market and reported a 149% growth rate for 1997-1998 compared to the market average of 135%.