they were selling for slightly over $212.

We will discuss the reasons why stock prices fall and rise so abruptly below, but first you need to know how we

measure stock market performance. There are a number of different ways to measure the overall performance
418 17 • Financial Markets

of the stock market, based on averaging different subsets of companies' stock prices. Perhaps the best-known

stock market measure is the Dow Jones Industrial Average, which is based on 30 large U.S. companies' stock

prices. Another stock market performance gauge, the Standard & Poor’s 500, follows the stock prices of the 500

largest U.S. companies. The Wilshire 5000 tracks the stock prices of essentially all U.S. companies that have

stock the public can buy and sell.

Other stock market measures focus on where stocks are traded. For example, the New York Stock Exchange

monitors the performance of stocks that are traded on that exchange in New York City. The Nasdaq stock
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