The market indices, explained

Just Stock Quotes, 28 September 2026

The overview screen opens on the market indices, and every news bulletin ends with them: the Dow is up, the Nasdaq is down, the S&P closed flat. They are the market's headline numbers, and like most headlines they are more useful once you know what is behind them. This guide explains what each index measures, why they often disagree, and how to use them to read your own watchlist.

What an index is

An index is a basket of stocks combined into one number by a rule. The number itself is arbitrary; nobody cares that the S&P 500 is at some particular level. What matters is its change, because the change is the average change of the basket, and the basket is chosen to represent something: the largest companies, a particular exchange, a particular sector.

The rule for combining the stocks is where the indices differ, and it is the reason they diverge.

The S&P 500

Five hundred of the largest US companies, weighted by market value. A company worth three trillion dollars counts many times more than one worth thirty billion, so the index is dominated by its largest members. When the ten biggest companies rise and the other four hundred and ninety fall, the S&P 500 rises. It is the index most funds track and the benchmark most people mean when they say "the market". SPY is the fund that tracks it, and it makes a good benchmark on a watchlist.

The Nasdaq Composite

Every stock listed on the Nasdaq exchange, several thousand of them, weighted by market value. Because the exchange is home to most of the largest technology companies, the Composite behaves like a technology index: it rises more than the S&P on days technology leads and falls more on days it lags. The Nasdaq 100, tracked by QQQ, is the hundred largest non financial names on the exchange and behaves the same way, more so.

The Dow Jones Industrial Average

Thirty large, well known companies chosen by a committee, weighted by share price. That last part is the odd one: a stock at five hundred dollars moves the Dow ten times as much as a stock at fifty, regardless of the size of the company. The Dow is the oldest of the three and the one most quoted in headlines, and it is the least representative of the market. It is also the one that moves the most in points on any given day, because its level is high, which makes for good headlines and poor comparisons. Read its percent change, never its points.

Why they disagree

On most days the three move together, because most stocks move together. On the days they disagree, the disagreement is the story. Nasdaq up and Dow down means technology led and the old economy lagged, and money was rotating. S&P up and most stocks down means a few giants carried the index, which is a narrower rally than the number suggests. The overview screen's top gainers and top decliners lists give you the same picture from the bottom up: what actually moved, regardless of how big it is.

Reading them against your watchlist

The pulse line above your watchlist says how many of your stocks are up and down. The indices say how many of everyone's are. Put the two together and you know whether today was about your stocks or about the market.

Your list up, market up: the tide. Your list up, market down: you picked well, or you are concentrated in whatever led. Your list down, market up: the reverse, and worth a look at which names lagged and why. Your list down, market down: the tide again, going out.

Keeping SPY or QQQ on the watchlist makes the comparison automatic, because the benchmark's own percent change sits right there in the list, and the top mover and laggard on the pulse line are measured against it in your head without any effort.

The number that matters

Percent change, always. The Dow moving four hundred points sounds dramatic and is about one percent. The S&P moving forty points sounds tame and is also about one percent. The indices are on different scales and only percent puts them, and your own stocks, on the same one.