Legal Definitions - market average

Market average refers to the price level of a specific group of stocks. It is a benchmark used to evaluate the performance of individual stocks or portfolios.

For example, the S&P 500 is a market average that tracks the performance of 500 large-cap stocks listed on the US stock exchanges. The Dow Jones Industrial Average is another market average that tracks the performance of 30 blue-chip stocks.

Investors use market averages to compare the performance of their investments with the broader market. If their portfolio outperforms the market average, it is considered a good investment. If it underperforms, they may need to re-evaluate their investment strategy.

Overall, market averages provide a useful tool for investors to gauge the health of the stock market and make informed investment decisions.