Track 3 · Lesson 1 · 5 min
Indexes and the whole market
What the S&P 500, Nasdaq-100, Dow and TSX are, why the giants move them, and what concentration means.
An index is a scoreboard for a group of stocks. The S&P 500 tracks 500 large U.S. companies. The Nasdaq-100 tracks the 100 largest non-financial companies on the Nasdaq, heavy in technology. The Dow tracks 30 big names, weighted by share price, an old quirk. The Russell 2000 tracks small U.S. companies and the TSX Canada's market.
You can't buy an index directly. Index funds and ETFs, such as SPY or Canada's XIU, hold the stocks to match it closely and cheaply.
Most indexes are cap-weighted: each company counts in proportion to its market value. So the biggest companies move the index most.
Try it
Build a tiny index
Five real companies at their real market values.
Checkpoint
In a cap-weighted index, the largest company rises 20% and the other four fall 5% each. What can happen?
If the giant's weight is big enough, its 20% rise outweighs the smaller companies' falls.
Concentration. When a few giants carry an index, it is less diversified than its name suggests. The top ten stocks were about 38% of the S&P 500 in mid-2026, against about 27% at the 2000 peak. Tonight the equal-weight S&P 500 has lagged the regular index by 15% over three years.
Be The Puck runs every play on the indexes too, and tracks concentration, valuation and seven other gauges on the Markets page.
Check yourself