What Makes an Index Tick?

I. What Is an Index?: Section 5 of 5

How an index moves at any given time depends on a number of factors. Monitoring these factors can help you see the direction the market is heading.

Economic Growth and Health.

Generally, the more healthy and robust the economy, the better its stock and commodity markets will perform. Reports such as gross domestic product (GDP), employment levels, retail sales, capacity utilization and others, detail the levels of economic growth and health.

Economic Numbers.

While economic numbers can certainly reflect economic policy, some reports and numbers become important to market psychology and may have an immediate impact on short-term index market moves. "What to watch" can change over time. In recent years, for example, interest rates, employment data, trade balance figures, and inflation numbers have all had their time in the spotlight.