S&P 500 Index

S&P 500
^GSPC
$4,247.44
0.19484346%


52 Week Range52 Weeks High52 Weeks Low
$4,249.74$2,965.66

What is the S&P 500?

S&P 500 Index

The S&P 500 (Standard & Poor's) is the biggest index in the United State that Indicates the performance of top 500 large cap stocks that are available for publically trade on the NYSE or NASDAQ. The indice holds $35.38 trillion market capitalization which is more than 70% of the total ($49.10 trillion) U.S. stock market cap, comprising 11 different leading sectors. (Update: 01/04/2021)

All the S&P 500 Companies are selected by the U.S. Index Committee based on many factors, like - Market Cap, Revenue, Liquidity, Sector, Shares in the Public, Performance, Location, and Annual Trade Value etc.

For that reason, the S&P 500 is the face of the entire American market which the investor use as a benchmark so that they can compare other investment instruments at a standard level.

How the S&P 500 Works?

The Standard & Poor's 500 work on weighted market capitalization method which means that a company with a high market cap has a high ranking in the index. The calculation of companies weightage is very simple, taking the each company's market cap and dividing it by the total market cap of the S&P 500 index.

S&P 500 Weightage Formula

[Note: In the S&P, Company's free float market cap is used to calculate the weight, which means only those shares are taken which are available for public trade, other share are not included.]

Company Market Cap = Current Market Price of Stock x Company's Outstanding 

Total Market Cap of Index = Add The Market Cap of Each Company in The Index

For example: Apple has a market cap of $2.128 trillion (14 May 2021), while the total market cap of the S&P 500 is $37.57 trillion (estimated), so the weighting of Apple stock is 5.66 in index.

Companies with a large market cap in the index get a more impression compared to small market cap companies. As a fact, the technology sector in S&P 500 has more than 27% of weightage which means this industry are more effective than others on an index.

Also stock weight is a valuable data for investors because they can't directly invest in S&P 500, but in weightage method they can understand the importance of each stock and divide there portfolio based on stock weight to get same return of index.

Top Companies & Sectors

Being the largest index in the world and the United States, the S&P companies lead the economy as well as reflect the market behavior. The total number of stock in index is 505 (with different class of shares) but the surprising thing is that only the top 10 companies weight is more than 25% of the entire index.

As of 14 May 2021, this is the top ten S&P 500 companies by weightage -

10 Largest Comapnies In S&P 500

As of Jan 2021, the S&P 500 sector weightage -

S&P 500 Sector Weightage

S&P 500 vs. Other Index

The S&P 500 index is represents the top 500 large cap stocks based on weighting market capitilization but the Dow Jones Industrial Average (DJIA) also known as the Dow 30 is focused on thirty blue chip publicly-traded stocks which is price-weighted.

The value of the Dow reflecting the sum of the share price of the 30 stocks adjusted by dividend or stock split and all companies ranking changes on their importance, whereas S&P consists of stocks by committee only.

The S&P has all type of sector stock which is not consider in Nasdaq Index because Nasdaq 100 is works on updated market cap method which includes 100 non-financial large cap companies which are listed on Nasdaq Stock Exchange. This new methodology uses different weights of the items involved in market capitalization and balance the index with all companies.

S&P 500 Important Events

Below you can understand the timelime & events of S&P 500 with closing price.

Date

Close ($)

Milestone Events

June 4, 1968

100.38

First time above 100

October 19, 1987

224.84

Falling 20.47% in a single day (Black Monday) 

February 2, 1998

1,001.27

First close above 1,000

March 24, 2000

1,552.87

At the peak of the dot-com bubble

October 10, 2002

768.83

Enter your text here...

October 11, 2007

1,576.09

The index achieved a new all-time intraday high

October 13, 2008

1,003.35

Best single-day 11.6% percentage gain since 1957

March 28, 2013

1,565.15

Recovering all its losses

August 26, 2014

2,000

For the first time

September 21, 2018

2,929.67

New high record

March 12, 2020

2,480.64

Largest fall during Covid-19 (bear market)

August 18, 2020

3,389.78

End of bear market

April 1, 2021

4019.79

First time close above 4000

The S&P 500 Metrics

  • Return

  • PE Ratio

  • Weightage

  • EPS

  • Dividend Aristocrats

S&P 500 Historical Annual Return

The index has generated around 11%-12% annual average returns in the last 93 years (1926-2019). So If you had invested $100 in the S&P 500 index at the beginning of 1970, it would have grown to nearly $15400 by the end of 2019 (with dividend)

S&P 500 Returns

How to Invest In S&P 500

If you want to start investment then the S&P 500 is a good option, where you can focus on large-cap & blue-chip stock to get a stable return but as we know that we can't invest in an index directly. So here are the certain ways like Mutual Funds and ETFs that can help us to invest in all S&P stock within a single click.

Now the question is "How to buy s&p 500 index fund & mutual funds" for that you can follow these step by step process -

01
Open a Brokerage Account

To start investing, first you need a brokerage account which is takes only 1-2 business day. If you don't know what is the best brokerage account for you then we recommnend go with TD Ameritrade or Fidelity.

02
Select the Best Option

Before investing, you have to choose any one option from mutual funds and ETFs which is convenient for you, with many comparisons we know that ETF is good with low fees and easy process.

03
Pick Your Favorite Fund

Now you have to compare ETF funds in details like charges, return and performance so you can pick the good one. You can also start with Fidelity and Vanguard S&P 500.

04
Login at Your Trading App

Enter username and password to log in at the trading app after that you can add or deposit your suitable amount in your brokerage account and ready to buy.

05
Buy Funds and Units Will Be Credited

Finally, you can buy a fund in few clicks and after the unit credited to the account, you are an ETF fund owner.

Frequently Asked Questions

What is the S&P 500?

The S&P 500 is the Standard and Poor's 500 large cap companies index which is available for publicly traded. Its biggest & popular indices represent the U.S Stock Market.

How Many Companies are in the S&P?

The S&P 500 consits of 500 companies but actual total stocks is 505 with different classof stocks.

Should I Invest in the S&P 500?

According to me, this is a safe way to invest for long term stable return goal because you invest in those stocks which are leading the world biggest economy.

What is the S&P 500 Annual Return?

The average annual return of S&P 500 is 11% to 12% and the rest are given below -
Average ReturnAdjusted InflationInclude Dividend
05 Years8.04%12.37%
10 Years9.79%14.09%
15 Years5.98%10.45%
20 Years3.33%7.65%
25 Years7.35%11.90%
30 Years6.53%11.47%

What are the Top Companies of S&P 500?

  1. Apple Inc.
  2. Microsoft Corp.
  3. Amazon.com Inc.
  4. Facebook Inc. A
  5. Alphabet Inc. A (GOOGL)
  6. Alphabet Inc. C (GOOG)
  7. Berkshire Hathaway
  8. JPMorgan Chase
  9. Johnson & Johnson
  10. Tesla

What are the Top 3 Industries of S&P 500?

  1. Information technology: 27.60%
  2. Health care: 13.44%
  3. Consumer discretionary: 12.70%

What was the worst day and year for the S&P 500?

The worst day is 19 Oct. 1987 (Black Monday) when the index fell 20.47% in a single day and the worst year is 2008 (Market Crash).

What is the last 100 years return of S&P 500?

Last 100 Year Return of S&P 500


About the Author

Hi! My name is Abhishek Vyas and I am the co-founder & senior editor of Finasko. I write about better investing and financial decision making to achieve financial freedom.

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