S&P stands for Standard and Poor, the names of the two companies that started it. It was officially started on March 4, 1957, by Standard & Poor. Later, McGraw-Hill took it over in 1966. As of 2022, it's owned by S&P Dow Jones Indices, a partnership between S&P Global (formerly McGraw Hill Financial), CME Group, and News Corp, the owner of Dow Jones.
As of January 7, 2022, the S&P 500 had an average yearly return of 13.9% over the past 10 years.
The S&P 500 keeps an eye on how much all the companies in its list are worth. Market cap shows the total value of all the shares a company has. To find it, you multiply the number of shares by the stock price. For example, a company with a market cap of ₹100 billion is represented ten times more than a company with a market cap of ₹10 billion. As of January 2022, the S&P 500's total market cap was ₹34 trillion.
The index uses a float-adjusted market cap for its weighting. This means it focuses only on the shares available for the public to buy. It doesn't include shares held by controlling groups, other companies, or government agencies.
A team picks the 500 companies for the index based on how easily their stocks can be bought or sold, their size, and what industry they're in. They adjust the index every three months: in March, June, September, and December.
For a company to get into the index, it needs to be in the United States and have a market value of at least ₹13.1 billion. More than half of its stocks must be available for the public to buy. Its stock price must be at least ₹1 per share. It also needs to file a specific type of annual report called a 10-K. Over half of its assets and money earned must come from the United States. Lastly, it should have made a profit for four quarters in a row.
The company's stock can't be traded on pink sheets or over-the-counter. It needs to be listed on well-known stock exchanges like the New York Stock Exchange, Investors Exchange, Nasdaq, or BATS Global Markets.
By January 7, 2022, the S&P 500's top ten biggest companies, based on their market value, were:
The industries in the S&P 500 show how the economy is structured.
As of January 7, 2022, the S&P 500 was divided into different sectors, which were:
The S&P 500 has more big companies compared to the Dow Jones Industrial Average. The Dow follows 30 companies that show different industries. It represents almost 25% of the U.S. stock market and is widely used as a key market indicator globally.
The S&P 500 has less technology-focused companies than the Nasdaq. Around June 2021, about 55% of Nasdaq companies were related to information technology, while the S&P 500 had 28%.
Despite their variations, these stock indexes often move in a similar way. You can gauge how the overall stock market is performing by paying attention to just one of them. Following all three is not necessary.
The table below displays important moments in the history of the S&P 500, such as its highs, lows, and other notable events.
| JUNE 4, 1968 | 100.38 | First time above 100 |
| OCT. 19, 1987 | 224.84 | Black Monday |
| MARCH 24, 1995 | 500.97 | First close above 500 |
| FEB. 2, 1998 | 1,001.27 | First close above 1,000 |
| OCT. 9, 2007 | 1,565.15 | Highest close before financial crisis |
| OCT. 13, 2008 | 1,003.35 | Largest % gain of 11.6% |
| AUG. 26, 2014 | 2,000.02 | First close above 2,000 |
| SEPT. 21, 2018 | 2,929.67 | New record high |
| JULY 12, 2019 | 3,013.77 | First close above 3,000 |
| MARCH 12, 2020 | 2,480.64 | Largest % decline since Black Monday, entered bear market |
| MARCH 23, 2020 | 2,237.40 | Stock crash low |
| AUGUST 18, 2020 | 3,389.78 | New record high end of bear market |
| AUGUST 28, 2020 | 3,508.01 | Closes above 3,500 |
| APRIL 1, 2021 | 4,019.87 | Closes above 4,000 |
| OCT. 13, 2021 | 4,519.63 | Closes above 4,500 |
You can't directly invest in the S&P 500, but you can copy its performance by using an index fund. Another option is to buy stocks from companies listed in the S&P 500.
You can adjust the importance of stocks in your investment portfolio based on their market value, similar to how the S&P does it.
You can look at the S&P 500 to see how the U.S. economy is doing. When people feel good about the economy, they usually buy more stocks.
As the S&P 500 focuses on U.S. stocks, keeping an eye on international markets, like China and India, can give you a broader perspective. You might also think about investing a small part of your money in commodities like gold. These can keep their worth even if stock prices drop.
In addition to watching the S&P 500, keeping an eye on the bond market can assist your investment plans. Standard & Poor's rates bonds. While bond prices often move differently than stocks, this isn't always true. Both bond and stock prices can sometimes change a lot.
There are various bond types like Treasury, corporate, and municipal bonds. Bonds help to keep the U.S. economy running smoothly by providing liquidity. They can also affect mortgage interest rates.
You can't invest directly in the S&P 500 itself, but you can invest in individual companies listed within its index. Another way is to invest in S&P 500 index funds, which aim to mirror the performance of the S&P 500 closely.
To be part of the S&P 500, companies need a market value of at least ₹13.1 billion without adjustments. They also must meet requirements related to how easy it is to buy and sell their stock, as well as show they are profitable.
The S&P 500 keeps an eye on the value of 500 stocks it includes. These stocks come from the biggest companies in the U.S., chosen based on their total worth in the stock market.
