Just what is a “point” in the stock market? Is it a dollar?

Juda Ben Hur: Just what is a “point” in the stock market? Is it a dollar?
Just about every day we get an update on what the stockmarket has ‘done’ (or has ‘not done’). “The Dow Jones” average was up to 13,000, or whatever.

Just exactly what does this mean?

Answers and Views:

Answer by Matt M
it could be but it could be more or less

Answer by johnathanapples
YES.. one point is one dollar. But when the Fed. talks about 25 basis points they are talking about 1/10 of 1 percent.

Answer by The Shadow
No, a point in a stock market index is not the same as a dollar.

The Dow Jones Industrial Average is a price-weighted average of the stocks of 30 large corporations. Price-weighted means that higher priced stocks have a greater influence on the index then lower priced stocks. In other words, a $ 50 stock will move the index more than a $ 20 stock. The index also has to be periodically adjusted to allow for stock splits. Otherwise, the index would be negatively impacted every time a component stock splits because the price is reduced to reflect the split.

A point can mean a dollar in some other types of usage. “Exxon is up three points today” means that Exxon’s stock increased three dollars.