Originally a benchmark was a surveyor's mark indicating a specific height above sea level, but it has come to have a much broader meaning in the world of investing. A stock market benchmark, for example, is an index whose movement tracks a particular segment of the market and is considered a general indicator of the strength or weakness of that segment.
For example, the Standard & Poor's 500 Index (S&P 500) and the Dow Jones Industrial Average (DJIA) are the most widely followed benchmarks, or indicators, of the US market for large company stocks.
There are other indexes that serve as benchmarks for both broader and narrower segments of the US equities markets, of international markets, and of other types of investments such as bonds, mutual funds, and commodities. Individual investors and financial professionals often gauge their market expectations and judge the performance of individual investments or market sectors against the appropriate benchmarks.
In a somewhat different way, the changing yield on the 10-year US Treasury bond is considered a benchmark of investor attitudes. For example, a lower yield is an indication that investors are putting money into bonds, driving up the price, possibly because they expect stock prices to drop. Conversely, a higher yield indicates investors are putting their money elsewhere.