Market indexes are constructed using various methods:
Price-weighted Index: In this method, stocks with higher prices have more influence on the index. An example is the Dow Jones Industrial Average (DJIA). Market-cap Weighted Index: Here, stocks with higher market capitalization have a greater impact on the index. The S&P 500 is a notable example. Equal-weighted Index: Each stock in the index has an equal influence, regardless of its price or market cap.