Index (economics)

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This article is about index in an economics and finance sense. For other uses, see Index.

Please help improve this article or section by expanding it. Further information might be found on the talk page or at requests for expansion. (January 2007)

In economics and finance, an index is a single number calculated from a set of prices or of quantities. Examples are a price index, a quantity index (such as real GDP), a market performance Index (such as a labour market index / job Index or a stock market index). Values of the index in successive periods (days, years, etc.) summarize level of the activity over time or across economic units (regions, countries, etc.).

In financial markets, an index is a customized basket of securities that tracks a particular market or a part of it. Each index has its own calculation methodology and its own specific process in order to select particular securities. Some companies (S&P, Dow Jones, SG Index, STOXX) have created a lot of indices to replicates different markets or selected industries. S&P is one of the most known index provider with the S&P 500. It offers a wide range of indices like the S&P Asian Index which measures the equity market of a basket of Asian countries (India, China, Hong Kong, Taiwan, Korea and Singapore). S&P is also a rating company like Moody’s and Fitch rating which give score to the societies debts. Dow Jones Indexes provide a range of indices like the world oldest, and very famous, Dow Jones Industrial Average. It provides also an index which measures the stock performances of 50 leading multinational companies. SG Index, a new provider of indices (it was created in 2007) provides indices that can be used as underlying of financial products. One of the most famous index is the SGI Wise Index, that provides an exposure to European equities.

Consumer price indexes can be used, among other things to adjust salaries, bonds interest rates, and tax thresholds for inflation.

Some investment funds (index funds) manage their portfolio so that their performance mirrors (tracking) the performance of a stock market index or a sector of the stock market.