Britannica Money (2024)

The S&P 500 is a broad-based stock market index that tracks roughly 500 publicly traded United States-based companies. It is considered by many investors and analysts to be the best overall measurement of American stock market performance.

S&P Global (formerly Standard & Poor’s), which sponsors a number of other market indexes—and also operates one of the “Big Three” credit rating agencies—traces its roots to an investment information service begun in 1860 by Henry Varnum Poor. In 1941, Poor’s original company, Poor’s Publishing, merged with Standard Statistics (founded in 1906 as the Standard Statistics Bureau) and assumed the name Standard and Poor’s Corporation, a provider of financial information and analysis.

The S&P 500 Index (SPX), formerly called the Composite Index (and later Standard & Poor’s Composite Index), had been launched on a small scale in 1923. It began tracking 90 stocks in 1926 and expanded to 500 in 1957. Unlike the Dow Jones average, the S&P 500 is “market-cap-weighted,” meaning that it computes a weighted average of the stocks constituting the index. As a result, the stocks with a larger market valuation have a greater impact on the overall index.

The companies listed on the S&P 500 represent a who’s who of U.S. industry, and additions and deletions from the list often indicate market trends. Some of the top-weighted companies in the index include Apple, Inc., Microsoft Corporation, Amazon.com, and Tesla, Inc.

The S&P 500 consists of 11sectors: energy, information technology, consumer staples, consumer discretionary, utilities, real estate, communication services, financial, industrial, materials, and health care.

The index is frequently used as a performance benchmark versus stocks, stock-based ETFs, and mutual funds, and thus has a beta of 1.0.