What Are Stock Indexes?

NBCU Academy 101

CNBC On Air Stocks Editor Bob Pisani explains stock indexes, how journalists report on them and tips for using stock indexes in the news. He also warns that the economic situation on “Wall Street” does not necessarily reflect the economic situation on “Main Street.”

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“Understanding the market indices are important because they are a quick way to gauge the ‘temperature’ of the market, whether the trend is up or down,” Pisani said. “But keep in mind that while the stock market reflects the state of corporate America very well, it does not necessarily reflect how the average American might be faring.”

CNBC’s Kirsten Chang and Jason Gewirtz assisted with producing this video.