Learn the stock market › The stock market from zero › Lesson 8 of 9
What is a stock market index?
One day in the S&P 500
This is the index and 20 of its largest companies on Nov 6, 2026.
| Nov 6, 2026 | Change |
|---|---|
| S&P 500 | +0.31% |
| AMD | +11.0% |
| Tesla | +4.2% |
| Palantir | +3.5% |
| Nvidia | +2.8% |
| Meta | +0.8% |
| Oracle | +0.8% |
| Alphabet | +0.8% |
| Broadcom | +0.7% |
| Exxon Mobil | +0.3% |
| Visa | +0.0% |
| Berkshire Hathaway | −0.3% |
| Amazon | −0.3% |
| Mastercard | −0.5% |
| Apple | −0.5% |
| Eli Lilly | −0.8% |
| JPMorgan Chase | −0.8% |
| Microsoft | −1.0% |
| Costco | −1.1% |
| Walmart | −1.7% |
| Netflix | −3.3% |
The biggest rise here was AMD, +11.0%. A plain average of these 20 came to +0.73%, against the index's +0.31%. They need not match: the index holds hundreds more companies, and large ones weigh more.
How an index works
An index isn't something you own. It is a number worked out by set rules: which stocks are in, and how much each one counts. In the S&P 500 large companies count for more than small ones, so a move in the largest shows up more. The list is reviewed regularly, so it changes.
The number itself doesn't mean much. What counts is how it changes, the percentage.
The index year by year
This is how the S&P 500 ended recent years. The last row is this year so far.
| Year | Last close | Change |
|---|---|---|
| 2017 | 2674 | +19.4% |
| 2018 | 2507 | −6.2% |
| 2019 | 3231 | +28.9% |
| 2020 | 3756 | +16.3% |
| 2021 | 4766 | +26.9% |
| 2022 | 3840 | −19.4% |
| 2023 | 4770 | +24.2% |
| 2024 | 5882 | +23.3% |
| 2025 | 6846 | +16.4% |
| 2026 | 7377 | +7.8% |
This index leaves out dividends, so owners of the companies got more than these numbers show. In 2025 it moved +16.4%. What the market has returned a year over longer spans is in the study of the average return.
Why indexes exist
A quick answer. When someone says the market went up today, they usually mean an index.
A comparison. If your stock rose 5% in a year, it says more once you know what the index did. How a whole market moves is in the lesson on why the market falls.
A base for funds. Index funds buy the stocks in an index so that they follow it. How that works is in the lesson on index funds.
Test yourself
The index rose 1% today, but most of its companies fell. How can that be?
How did it go today? How the market did.