posted on 06-06-2019

Market Average

Updated October 1, 2019

What it is:

A market average is the general level of prices in a stock market as expressed by a basket of frequently traded stocks.

How it works/Example:

A market average, best exemplified by the Dow Jones Industrial Average (DJIA) and the S&P 500 Index, is based on a basket of stocks, not all the stocks that trade on any given day.

Market averages can be price-weighted or market-weighted, depending on the methodology specified by the company that publishes the particular market average.

Why it matters:

The prices of stocks in a given market vary in terms of industry and frequency of trading, and it is not practical to account for every registered stock. A market average provides an overview of market activity that speaks to investor perceptions and economic productivity.

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Submitted by Anonymous on Thu, 06/06/2019 - 07:18

Market Average

What it is:

How it works/Example:

Why it matters:

Related Terms