share price index


Stock Index

A group of stocks put together in a standardized way to provide a useful window into a sector or market's performance at a glance. That is, a stock index groups together a certain list of stocks and usually takes an average of their prices so as to provide an idea of how the industry or market represented in the stock index is doing. Very often, stock indices are weighted to prevent a few data points from overwhelming it. For example, the S&P 500 is weighted according to market capitalization, while the DJIA is weighted for price.

share price index

a measure of the change in the average prices of company shares over time. In the UK the Financial Times All-Share Index records day-to-day movements in the average price of all company shares listed on the London STOCK MARKET. The Financial Times 100 share index (FTSE-100), the FTSE-250 share index and the FTSE-350 share index show movements in the share prices of, respectively, the top 100,250 and 350 companies by market capitalization. A similar role is performed in the US by the Dow-Jones Index and the Nasdaq Index, and in Japan by the Nikkei Index

In technical terms, a share price index is compiled by noting the prices of the shares included in the index at some ‘base’ point in time (for example, 2 January 2001) and assigning an index number (say 1000) to begin the series. If share prices generally start to increase then this is translated into an upward movement in the value of the index (for example, the value of the index at 2 January 2002 may be, say, 1500, indicating that share prices on average have increased by 50% over a one-year period). Likewise, general falls in share prices are recorded as a decline in the value of the index.

Share price indices reflect the corporate sector's underlying profit and growth record and also act like a barometer of investor confidence or lack of it, about the state of industry and the economy generally See PRICE INDEX.

share price index

a measure of the change in the average prices of company SHARES over time. In the UK the Financial Times All-Share Index records day-to-day movements in the average price of all company shares listed on the London STOCK EXCHANGE. The Financial Times 100 share index ( FTSE-100), the FTSE-250 share index and the FTSE-350 share index show movements in the share prices of, respectively, the top 100,250 and 350 companies by market capitalization. In the USA share price movements are monitored by the Dow-Jones Index and the Nasdaq Index and in Japan by the Nikkei Index

Share price indices reflect the corporate sector's underlying profit and growth record and also act like a barometer of investor confidence in the state of industry and the economy. See PRICE INDEX.