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Related to averages: Weighted averages
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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Stock price measures that are calculated and distributed by a number of organizations including Dow Jones, Standard & Poor's, and organized securities exchanges. The two major stock price measures are the Dow Jones Averages and the S&P 500. Also called average, market averages, market index, stock average. See also index.
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.