Stock market indices are tools used to measure the performance of a group of stocks. The most important stock market indices include the Dow Jones Industrial Average (DJIA), the S&P 500, and the NASDAQ Composite.

The DJIA is a price-weighted index that tracks 30 blue-chip stocks and is considered a benchmark for the performance of the U.S. stock market. The S&P 500 is a market-cap-weighted index that tracks the performance of the top 500 publicly traded companies in the U.S. and is considered a benchmark for the overall U.S. stock market. The NASDAQ Composite is a market-cap weighted index that tracks all the companies listed on the NASDAQ stock exchange and is considered a benchmark for technology and internet-based companies.

Each index has its own criteria for the inclusion and weighting of stocks, which leads to differences in their performance and the sectors they represent. For example, the DJIA tends to be more focused on blue-chip companies and the S&P 500 on the broad market, while the NASDAQ Composite is focused on technology and internet-based companies.

The most important stock market indices track the performance of key segments of the global financial markets, serving as economic indicators and benchmarks for investors. The S&P 500 includes 500 large-cap U.S. companies, representing about 80% of the market capitalisation, making it a broad measure of the U.S. economy. The Dow Jones Industrial Average (DJIA) tracks 30 major blue-chip stocks, offering a snapshot of industrial and corporate health. The Nasdaq Composite focuses heavily on technology and growth stocks, reflecting trends in the tech sector. Internationally, the FTSE 100 (UK), DAX 40 (Germany), and Nikkei 225 (Japan) track leading companies in their respective regions. These indices differ in composition, sector weighting, and methodology; some are price-weighted (DJIA), while others are market-cap-weighted (S&P 500). Investors use them to gauge market trends and diversify portfolios.