2016-11-23 — marketwatch.com
"Price-weighting" an index is old-fashioned and anachronistic. It means that each stock influences the index in proportion to its price per share, so that a stock trading for $100 per share has 10 times the pull of a stock trading at $10 per share.
By comparison, a "cap-weighted index" such as the S&P 500 uses the market value of the listed stocks as the basis for how much weight they carry in the benchmark. There are also equal-weight indexes -- where each stock pulls the same weight -- and any number of other constructions, virtually all of them now considered superior by experts to the price-weighted methods of the Dow.
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