The main stock indices are managed by the exchanges of developed countries. The S&P 500 (SPX), Dow Jones Industrial Average (DJI) and Nasdaq Composite (IXIC) are the world’s largest indices based on the market capitalization of their constituents. The name of the index usually indicates the number of its constituent companies. For instance, The Nikkei 225 (NI225) represents 225 companies and is widely seen as a leading indicator of Japan’s equity market.
The value of an index is usually calculated based on either the prices or market capitalization of its constituents.
They are called price-weighted index and capitalization-weighted index. Many investors pay close attention to major indices as they often show the state of the entire economy.