In the stock market, an index is a statistical measure of change in various security prices. It is a group or basket of securities, derivatives, or other financial instruments that represents and measures the performance of a specific market, asset class, market sector, or investment strategy. An index tracks the performance of a group of preselected investments, such as stocks, bonds, or mutual funds, using a standardized metric and methodology. It helps investors compare current stock price levels with past prices to calculate market performance. Market indices provide a broad representation of how markets are performing and serve as benchmarks to gauge the movement and performance of market segments. Some of the most important indexes in the U.S. markets are the S&P 500 and the Dow Jones Industrial Average. Each stock market index uses its own proprietary formula when determining which companies or other investments to include. Indexes that measure the performance of broad swathes of the market may only include companies that rank highly in terms of market capitalization, or the total value of all of their outstanding shares.