Although hundreds of indexes exist, Houston Financial Advisors Richard J. Alphonso and Steven A. Estrin say investment professionals generally refer to the following six to gauge how the markets are faring.

1. Dow Jones Industrial Average (DJIA).
The Dow is made up of 30 large capitalization stocks, such as American Express, AT&T and General Electric. Its components are widely held by individuals and institutional investors. They represent about a fifth of the $8 trillion-plus market value of all U.S. stocks and about a fourth of the value of stocks listed on the New York Stock Exchange.
The Dow is a price-weighted index, which means the share prices of its stocks are used to derive its value.
2. Standard & Poor’s 500 Stock Index (S&P 500).
The S&P 500 consists of 500 stocks chosen for market size, liquidity and, most important, industry group representation. It’s designed to reflect the returns of many different sectors and is one of the most widely used benchmarks of U.S. equity performance. It uses the more common market value (or capitalization) weighting method to calculate its value. With this method, each stock is calculated in proportion to its size or its price-per-share, and multiplied by number of shares outstanding. We believe this approach provides a more accurate picture of the U.S. stock market than the Dow, even though the S&P 500 and the Dow have produced similar returns during the past 25 years.
3. Russell 2000 Index.
This listing of 2,000 companies is the standard against which many small-cap investment managers are measured. It’s based on market value and is the most widely followed benchmark of small-capitalization stock performance.
4. NASDAQ Composite Index.
This index is maintained by the National Association of Securities Dealers Automated Quotation System (NASDAQ). It measures all stocks listed on the NASDAQ stock exchange. Like the S&P 500, it’s market-weighted.
5. Morgan Stanley Europe, Australia, Far East Index (EAFE, pronounced "eefah").
This index mimics the performance of publicly traded stocks around the world, except the United States. If you’re investing for the long-term, it makes sense to participate in growth around the world, not just in your own country.
The average annual return of the EAFE index has been about 14.5%. It’s calculated based on total return (current income and capital appreciation).
6. Lehman Brothers Long Treasury Bond Index.
Also known as the 30-Year Treasury Index, this total-return index is composed of the yield on the 30-year U.S. Treasury securities.