When you hear that the stock market increased, decreased or was flat on any given day, what’s being measured is the change in the value of a particular stock index.
An index is designed to measure the performance of the particular market it tracks. For example, a broad Canadian index would contain possibly all, or more likely a selection of Canadian stocks, that represent all the stocks listed on stock exchanges in Canada. The change in the value of the index provides us with an indication of how well (or poorly) that particular sector is performing.
Passive ETFs are designed to replicate the performance of a given index. Essentially, these indexed ETFs are investing in the same securities held by the index. So, when the index goes up or down, the ETF also goes up or down.