h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

The NYSE index. What is this thing? How do these people determine this number (and who are these people) that goes up and down creating overnight billionaires and also causing financial ruin for millions at the same time? I've yet to find an answer that delivers the goods so to speak. Many look at the NYSE index, and the DAX, and the Tokyo stock index as an overall snapshot of the nation's economic health. Can this be accurate? What gives? Why is it that the quotes are thrown around in every news summary, but these numbers are meaningless without some kind of context.

Stocks Indices's are basically an arbitrary number arrived at by some complicated mathematics based on the share value of the companies that are part of the index.

The indices's are an effect not a cause as suggested in you post. People don't go bankrupt because the NYSE indices's went down or any other indices's They go bankrupt because one the companies quoted on the NYSE went bankrupt, thus driving the indices's down. Stock exchange indices's are only one of many way of gaging a countries economic health. To use the stock exchange as the only indicators is fraught with problems.

The main UK indices's is the FTSE 100 with consists of the top one hundred companies in the UK. When the share price of one of those companies goes up, the indicies's go up, when the share price goes down, the indices's go down. So the question you should really be asking is what makes share prices fluctuate. The answerer is, the same as makes the price of anything fluctuate, supply and demand.

Donald