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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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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 ?
Electronic volume averaged 10.1 million contracts per day, up 16 percent from the prior September, while privately negotiated volume increased 34 percent to 195,000 contracts per day.
This group of companies averaged $97,000 in federal support in 1991 and managed to regain this level with $96,000 in 1999.
The report said that 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.76 % this week with an average 0.6 point, down from last week when it averaged 2.77 %.
In Suffolk County, the Class A average asking rent averaged $25.43, down a penny from the prior quarter, but almost a dollar more than the $24.46 a year earlier.
Motor gasoline product supplied during June 2004 averaged 9.2 million barrels per day, 1 percent higher than both the previous month's rate and the June 2003 rate.
* Prewar apartments Downtown averaged $812,000, an increase of 38%.
The price of electricity sold to residential consumers in May 2004 averaged 9.07 cents per kilowatthour, 1 percent higher than the May 2003 price.
Sales to the East of Park Avenue averaged $808 p.s.f.
The price of electricity sold to residential consumers in March 2004 averaged 8.61 cents per kilowatthour, 4 percent higher than the March 2003 price.
Total petroleum imports (1) averaged 12.6 million barrels per day in April 2004, 4 percent lower than the previous month's rate but 1 percent higher than the April 2003 rate.
Sales east of Park Avenue averaged $541 per square foot in 1998, up from $447, versus a rise to $649.79 per square foot from $451 in 1997 west of Park Avenue.
Total petroleum imports (1) averaged 12.8 million barrels per day in March 2004, 4 percent higher than the previous month's rate and 8 percent higher than the March 2003 rate.