An index is simply a compilation of stocks. For example, The Dow 30 are the largest companies in the largest industries of the US economy. So if an industry leader is having a good day then more than likely so is the rest of that industry. That is the thought process behind the Dow. However, I prefer a broader index like an S&P 500 or a Russel 2000. Instead of 30 stocks these indices have 500 or 2000 stocks respectively. Thus they give you a better picture of the overall economy rather than the top performers in an industry.