S&P 500 Overview
The S&P 500, or Standard & Poor's 500, is a stock market index comprising 500 large-cap U.S. companies. It represents approximately 80% of the total U.S. stock market value and is a leading indicator of U.S. equities.
History and Inception
Introduced by Standard & Poor in 1957, the S&P 500 was a revolutionary way to track the overall market performance. It replaced an earlier index that only tracked a smaller number of stocks.
Selection Criteria
Companies in the S&P 500 are selected by a committee based on market capitalization, liquidity, domicile, public float, sector classification, financial viability, and length of public listing.
Sector Diversification
The index is diversified across 11 sectors, including Information Technology, Healthcare, Financials, and Consumer Discretionary. This ensures a comprehensive representation of the U.S. economy.
Market Cap Weighted
The S&P 500 is a market-capitalization-weighted index, meaning that companies with higher market values have a larger impact on the index's price movement than those with smaller market caps.
Rebalancing and Updates
The S&P 500 is regularly updated. Companies can be added or removed based on eligibility criteria. Rebalancing occurs quarterly to reflect share adjustments of the constituent companies.
Influence on Markets
The S&P 500 is not just a market measure; it influences investor behavior. Trillions of dollars are indexed to it, making its performance a crucial aspect of portfolio management worldwide.
What year was the S&P 500 introduced?
Developed in 1947
Launched in 1957
Began in 1967
Company
