The S&P 500 Index is one of the main stock indexes in the United States, tracking 500 major companies. It’s often used as a benchmark for the stock market as a whole. The S&P 500 is also a weighted index, meaning that larger companies are given more consideration when calculating the index’s final value. As opposed to the Dow Jones Industrial Average, another major US market index, the S&P 500 focuses more on equity markets, while the DJIA is considered to be more of a gauge of retail investor sentiment. The S&P 500 price is thought to be more representative than the DJIA, as it tracks 500 companies while the DJIA only tracks 30.
One of the most-followed indexes on the market
Average annual growth of 9.8%
A good benchmark for US equities as a whole
The S&P 500 is made up of 500 companies, who are selected by a committee run by S&P Dow Jones Indices. It uses a variety of components to decide whether a company is eligible for inclusion in the index, with several minimum requirements. The requirements state that each company must be a US company, have a market cap of at least $5.3 billion, have a public float of at least 50% of outstanding shares, have reported positive earnings over the past five quarters, and be active and be traded above $1.