The S&P 500 index tracks the performance of 500 of the largest companies listed on US exchanges such as the New York Stock Exchange (NYSE) and Nasdaq. The S&P 500 chart is updated every 15 seconds during trading hours, which has made it a popular live indicator for the strength of the US equity market. It can be found under a variety of other names, including the Standard & Poor’s 500 and US 500, and the ticker SPX.
The S&P 500 is an index that currently comprises 505 common stocks listed by 500 large-cap companies on the US stock market. Its constituents make up approximately 80% of the entire market capitalization of American equities according to S&P Global.
However, contrary to popular belief, the index does not include all of the top 500 companies in terms of market capitalization. This is because eligibility for the S&P index is determined by a number of criteria – not just market cap – as outlined below.
The S&P 500 lists 500 large-cap companies from the US, including household names such as Apple, Alphabet (Google), Microsoft, Amazon and Facebook. Its composition is not fixed, however, as listing is dependent on strict criteria. Eligibility is based on a company’s:
Eligibility is reviewed periodically by committee and the index is updated whenever necessary – an event normally announced with a few days’ notice.
The S&P 500 index is ‘market capitalization weighted’, meaning each company within the index is given a weighting according to the total value of its outstanding shares. The index therefore takes into account both the number and value of the shares that are available for public trading. Companies with a large number of expensive shares have bigger weightings than companies with a small number of cheap shares. Changes to the S&P 500 price in real time, so that as the prices of the individual companies fluctuate, the S&P live chart will adjust too.
The S&P 500 price is dependent on the value of the companies that make up the index. Among other factors, their values can be affected by the following:
The value of the S&P 500 can also be affected by natural disasters, elections and government policies, which makes it important for traders to keep up to date with breaking news. For S&P 500 live analysis, take a look at our market news and technical analysis articles below.
The S&P 500 began trading in its current form on 4 March 1957. But its origins can be traced back to 1923 when it was introduced as the Composite Index and only consisted of a small number of US stocks.
Since 1957, the S&P index has seen annualized returns averaging over 11% – though this does not take into account inflation, which would see that figure revised downwards. However, while the average annual return has been positive, there has been significant volatility between years. For example, the index fell by about 60% during the 2008-2009 financial crisis, while in 2013 it rose by over 32% as the global economy began to recover.
The S&P 500 is important to traders because it includes companies from many different sectors and is therefore often seen as a proxy for trading the strength of the US economy as a whole. The S&P 500 price can move in response to interest rate decisions and macroeconomic releases, including US non-farm payrolls figures. This volatility creates opportunities for traders to profit – either by going long if they think the index will rise in value, or short if they think its price will fall.
How to trade the S&P VIX index. A guide to VIX and S&P correlation and how to calculate S&P volatility
The SP500 represents the general level of strength in the U.S. economy. This article will touch on strategies and tips for trading the SP500.
Learn how the indices are calculated, their trading differences and how to incorporate them into your trading strategy.
by Peter Hanks
Another round of US retailers warned of adverse impacts from the US-China trade war as the S&P 500 traded higher amid a license extension for Huawei.
by Peter Hanks
by Peter Hanks