While DJIA is often used to represent how the stock market as a whole is performing, the index consists of only 30 large companies

 Measuring - the stock market

Every day we hear numbers that evaluate the performance of the stock market, such as the Dow Jones Industrial Average or the Nasdaq Composite. There are countless market indicators, and it might seem that they are all measuring the same thing. However, each indicator assesses the market differently.

Dow Jones Industrial Average (DJIA)

While DJIA is often used to represent how the stock market as a whole is performing, the index consists of only 30 large companies. Despite its name, the Index is comprised of more than just industrial companies. The index includes legacy entities such as General Electric and 3M, as well as newer companies such as Apple, Nike, and VISA. Index components change from time to time, but it always includes stocks that are among the largest in the market. However, since the index represents the performance of a very limited number of stocks, it may not indicate what is happening in the wider market. The value of the DJIA is calculated by adding the price of all 30 stocks and then dividing them by a specific scale created by Dow Jones.

Standard & Poor's (S&P) 500

Another reading of the performance of large-cap stocks comes from the S&P 500 Index.

 The index is made up of nearly 500 of the largest companies in the United States (there are currently 504 stocks in the index). This is a "capitalization-weighted" indicator, which means that price movements among the major stocks will have a greater impact on the index than price movements between the smaller components of the index. However, the S&P 500 does not take into account the performance of medium or small-cap stocks.

Nasdaq composite

Companies that trade in a global electronic marketplace first created by the National Association of Stock Dealers (NASD) are included in this index. More than 3,000 common stocks are listed on the Nasdaq, including stocks, American Depositary Receipts (ADRs), and Real Estate Investment Trusts (REITs). Some companies may be located outside of the United States. The index is largely made up of technology companies, so the performance of that industry can greatly influence the index. Like the S&P 500, the NASDAQ Composite is calculated using market capitalization, with the top 100 stocks representing the most of its move.

Russell 2000

This index measures the performance of small-cap stocks in the US market across a wide range of industries. It is made up of 2,000 smaller stocks in the Russell 3000 Index, which measures the performance of the broad US stock market. Russell indexes are held by Russell Investments, a research and investment management firm. Shares in the Russell 2000 Index cross a wide range of industries.

MSCI EAFE

Morgan Stanley Capital designed the MSCI EAFE Index to help US investors understand the performance of stock markets abroad, particularly in developed countries. The index represents the combined returns of large and medium stocks in 21 countries across Europe, Australia, and the Far East (EAFE), including Great Britain, Germany, France, Japan, and Australia.

The recently developed index that has received increasing attention is referred to as VIX. This is an indicator symbol that represents the Chicago Options Exchange Volatility Index. Some investors view this indicator to get an idea of   the expected volatility or unpredictability of the stock market. The VIX calculates the expected level of volatility in the market by assessing current market prices for tools such as buying and selling. The number is quoted as a percentage. If the indicator is accurate, the higher the percentage, the greater the likelihood of a significant change in the market. Since this indicator was only about 12 years old, it has not yet been fully tested as an accurate indicator of market volatility.

Keep in mind that the performance of individual stocks or the funds that you own can differ, sometimes dramatically, from what is reported on the broader stock market.