The stock market indices play an important measure of economic health and progress of a country. Often, someone will say, "stock market" or "down", but is not necessarily a meaningful statement. Understanding how stock indexes are calculated and its history can be very useful for understanding the stock market as a whole. The Source Stock Market Indexes stock markets became more and more prevalent in industrialized countries, people started looking barometer "of the stock market as a whole. The first stock index was the Dow Transports, which was created by Charles Dow in 1884. It was followed shortly after by many other indices like the Dow Jones Industrial Average, which, in a heavily modified form, remains widespread and continued today. How CalculatedA indexes of stock market index is generally calculated by combining a weighted average of a set of populations in particular. For example, in the case of the Dow Jones Industrial Average 30 stocks are weighted by the price to obtain a measure of the overall market. Note that all rates are somewhat arbitrary, and are more useful as indicators of relative growth and historical rather than raw numbers. Moreover, many people often indexes are added or removed because of bankruptcy or simply becoming less relevant than other people. More recently, Kraft Foods replaced AIG in the Dow Jones Industrial Average. People IndicesThe more popularly referred stock market indices are American values: The Dow Jones Industrial Average – These are 30 of the largest in America. The S & P 500 – The 500 largest actively traded shares in the U.S.. The Nasdaq index – An index of all common stock on the NASDAQ. Indices Foreign Exchange: Other countries, of course, have their own securities markets and therefore their own use averages to measure them. Britain has the FTSE (pronounced "Footsie"), which is very similar to the Americas S & P. Japan's Nikkei index. Hong Kong's Hang Seng index has. Of course, many more.