Financial professionals look to benchmarks to measure just how well (or how poorly) their investments are doing. These benchmarks are known as indexes, and they cover every sector of the financial markets, from small-cap stocks to emerging nation bonds. Most of these indexes consist of a group or sample of representative investments that indicate how the overall market or a segment of the market is performing. Some widely used indexes track thousands of individual securities, while others look at fewer than fifty.

The Dow Jones Industrial Average (DJIA, also called the Dow) is the most prominent stock index in the world. It was named after Charles H. Dow, first editor of the Wall Street Journal, and his one-time partner Edward Jones, although Jones was not instrumental in creating the index. Dow's creation revolutionized investing, as it was the first publicly published gauge of the market. The thirty stocks on the Dow, which are all part of the New York Stock Exchange (NYSE), are all those of established blue-chip companies like McDonald's, Coca-Cola, DuPont, and Eastman Kodak. The Dow was created to mimic the U.S. stock market as a whole, and its companies represent a variety of market segments such as entertainment, automotive, health care products, and financial services.

The thirty stocks of the Dow Jones Industrial Average companies are weighted by stock price, rather than market capitalization, which is how most indexes are weighted. Basically, the Dow number is calculated by adding up the prices of all the stocks, then dividing by the number of stocks included in the index, adjusted for stock splits. The important point to remember is that each company carries equal weight.

Some indexes are capitalization weighted, giving greater weight to stocks with greater market value. For example, consider Standard & Poor's (S&P) Composite Index of 500 Stocks. The Standard & Poor's 500 Index, commonly known as the S&P 500, is a benchmark that is widely used by professional stock investors. The S&P 500 represents 500 stocks — 400 industrial stocks, twenty transportation stocks, forty utility stocks, and forty financial stocks. This index consists primarily of stocks listed on the NYSE, although it also features some over-the-counter (OTC) stocks.

The Russell 2000 index covers the small-cap equities market, so it tracks corporations that fall into the small-cap segment of the market, those with market capitalization falling between $300 million and $2 billion. The Russell 2000 is a subset of the Russell 3000 index, following the performance of only the 2,000 smallest companies in the Russell 3000.

Other indexes treat each stock equally. The Value Line Index tracks 1,700 equally weighted stocks from the NYSE, the National Association of Securities Dealers Automated Quotations (NASDAQ), and OTC markets. It acts as a market barometer, widely held to be the best measure of the overall market and a crucial monitoring tool for any investor.