When someone says 'the market is up today,' they're almost always talking about one of three indexes: the S&P 500, the NASDAQ Composite, or the Dow Jones Industrial Average. These are scoreboards for the stock market — they track a group of stocks and give you a single number that tells you how that group is performing. Think of them like the score of the game. You don't need to watch every player on the court — the score tells you who's winning. Each index tracks a different slice of the market, and understanding the difference is key to knowing what's actually happening with your money.

The S&P 500 is the gold standard. It tracks 500 of the largest publicly traded companies in the United States — names like Apple, Microsoft, Amazon, JPMorgan, and Johnson & Johnson. It's weighted by market capitalization, meaning bigger companies have a bigger impact on the number. Apple alone can represent over 7% of the entire S&P 500. When financial professionals talk about 'the market,' the S&P 500 is what they mean. Historically, it has returned an average of about 10% per year over the long term (before inflation), which is why so many people simply invest in an S&P 500 index fund and let it ride.

The NASDAQ Composite is heavily loaded with technology companies. It includes over 3,000 stocks listed on the NASDAQ exchange — think Apple, Google (Alphabet), Meta, Tesla, and Nvidia. Because tech stocks tend to be more volatile, the NASDAQ swings harder than the S&P 500 in both directions. In a tech boom, the NASDAQ outperforms. In a tech selloff, it drops faster. The NASDAQ 100 (tracked by the popular QQQ ETF) is a subset — just the 100 largest non-financial companies on the NASDAQ. If you're bullish on tech and innovation, the NASDAQ is your index.

The Dow Jones Industrial Average (the DOW) is the oldest and most famous of the three — it's been around since 1896. But it only tracks 30 blue-chip stocks: companies like Boeing, Coca-Cola, Goldman Sachs, and Walt Disney. Unlike the S&P 500, the DOW is price-weighted, not market-cap-weighted. That means a stock with a higher share price (like UnitedHealth at $500+) has more influence than a stock with a lower share price (like Coca-Cola at $60), regardless of company size. This makes the DOW a bit of an imperfect measure, but it's still the number you'll hear on the evening news. For serious investors, the S&P 500 is the better benchmark — but all three indexes together give you a full picture of how the US stock market is moving.