S&P 500

The S&P 500 is a stock market index that tracks the share prices of about 500 leading companies listed in the United States. Each company counts in proportion to the value of its shares available to the public, so the largest companies move the index most. It is published by S&P Dow Jones Indices and is the most widely used measure of how the US stock market, and large US companies in particular, are performing.

The index was launched in its 500-stock form on 4 March 1957 by Standard & Poor's, which had published smaller stock indices since the 1920s. Because its companies make up roughly four-fifths of the value of all US-listed shares, it serves as the default benchmark for US equity funds and the basis of some of the world's largest index funds and exchange-traded funds. It is often contrasted with the older, narrower Dow Jones Industrial Average and with the technology-heavy indices of the Nasdaq.

Imagine you want to know whether prices at a huge shopping mall are going up or down, but you cannot check every shop. So you pick the 500 biggest shops and add up what they are worth each day, counting a giant department store more than a small kiosk. If the total rises, the mall is doing well.

The S&P 500 does this for American business. When newsreaders say "the market rose 1% today", they very often mean this index. Buying a fund that copies it is like owning a tiny slice of every one of those 500 shops at once.

The S&P 500 is weighted by float-adjusted market capitalization. Since a transition completed in 2005, only shares available for public trading count; shares held by governments, founders or other strategic holders are left out. The index level is:

• $P_i$ is the share price of company $i$.
• $Q_i$ is the number of shares it has outstanding.
• $F_i$ is the investable weight factor, the fraction of shares available to the public.
• $D$ is the index divisor, which S&P adjusts whenever companies join or leave or issue shares, so that those events do not move the index.

As a simple example, suppose an index had two companies: one with a 100 price, 10 million shares and a float factor of 1, and one with a 50 price, 4 million shares and a float factor of 0.5. Their float-adjusted values add up to $1{,}000{,}000{,}000 + 100{,}000{,}000 = 1{,}100{,}000{,}000$. With a divisor of 1,000,000 the index stands at 1,100. The first company carries about 91% of the weight, which shows why a handful of very large companies can dominate the real index.

The index counts slightly more than 500 lines because a few companies, such as Alphabet, have more than one class of common stock in it. Besides the price index, S&P publishes a total return version that assumes dividends are reinvested.

Membership is not purely mechanical. The S&P U.S. Index Committee chooses constituents using published rules: a company must be based in the US, meet a minimum market capitalization that S&P raises from time to time, have enough liquidity and public float, and have positive earnings over its most recent four quarters combined and in the latest quarter. The committee also aims for balance across sectors. Changes are usually announced a few days ahead and take effect at quarterly rebalancings or when a company is taken over or delisted.

Being added often lifts a share price, because index funds must then buy the stock. Constituents are mostly large-cap stocks; S&P covers smaller firms in its MidCap 400 and SmallCap 600 indices.

S&P Dow Jones Indices was formed in 2012 by combining S&P Indices with Dow Jones Indexes; it is majority-owned by S&P Global, with CME Group holding a minority stake. Fund managers pay licence fees to use the S&P 500 name in products. Futures and options on the index trade on CME and Cboe exchanges and are among the most actively traded derivatives in the world.

For investors the index is both a measure and a product. Low-cost funds that track it popularised passive investing, and it is the yardstick most US active managers are judged against, through measures such as alpha and tracking error.

Because it is weighted by size, the S&P 500 has become concentrated: in 2024 and 2025 the ten largest companies made up well over a third of its value, so it is less diversified than its 500 names suggest. Its earnings rule and committee judgement mean it is not a complete or fully rules-based picture of the market. It excludes foreign companies and small firms, and its long-run record reflects survivorship bias, since failing companies are removed and replaced by successful ones.

• S&P 500 — S&P Dow Jones Indices