How is the S&P 500 doing today?
The S&P 500 opened today at 5,727.66. Within 30 minutes of trading, the benchmark index fell by 12.92 points, or 0.23%, to 5,714.74.
Year to date, the benchmark index is up, with a return of 20.70%.
S&P 500 market summary
S&P 500 performance
*The return comparisons are as of 9:30 a.m. ET.
S&P 500 index (SPX)
The S&P 500 (SPX), or Standard & Poor’s 500, is a notable stock market index that measures the performance of 500 large companies listed on U.S. stock exchanges. The index was introduced in 1957 and is now one of the most widely followed equity indexes. It is often considered a benchmark for U.S. market performance.
The S&P 500 is a market-capitalization-weighted index, meaning that larger companies account for a bigger portion of the index. It tracks around 80% of total U.S. market capitalization.
The index is updated in real time during market hours, reflecting price changes in its constituent companies as they happen. The well-known index isn’t only a tool for investors and analysts. It also serves as a benchmark for multiple investment products, including mutual funds, exchange-traded funds, options and futures.
“The S&P 500 has become the most widely used benchmark over the past 50 years due to its ability to serve as the best indicator for U.S. markets,” said Derek Horstmeyer, finance professor at George Mason University School of Business. “It has surpassed the Dow Jones Industrial Average in popularity due to its more cohesive and extensive construction.”
What companies are in the S&P 500?
Companies in the S&P 500 hail from all 11 Global Industry Classification Standard sectors, making it a comprehensive representation of the U.S. economy.
Here are the top 10 stocks in the S&P 500 index weighted by market capitalization.
S&P 500 selection criteria
The selection criteria for the S&P 500 index provides a comprehensive overview of the U.S. stock market.
- All constituent companies must be U.S.-based. Stocks listed on eligible U.S. exchanges, as well as real estate investment trusts, can make the cut. However, closed-end funds, ETFs, American depositary receipts and other specific types of securities are ineligible for inclusion.
- A company must have an unadjusted market capitalization of at least $14.5 billion, and its float-adjusted market cap, meaning the portion of shares available for public trading, must meet at least 50% of this threshold.
- Financial viability is another essential criterion; companies must exhibit positive earnings for the most recent quarter as well as the sum of the past four quarters.
- Liquidity is also a key factor; the ratio of the annual dollar value traded to float-adjusted market capitalization must be at least 0.75, meaning a substantial portion of the company’s publicly available shares are actively traded on the market. This ratio ensures liquidity and that the stock can be easily bought or sold without causing a significant impact on its price.
- The stock needs to have an investable weight factor of at least 0.10.
- Lastly, the stock must have traded at least 250,000 shares in the six months leading up to the evaluation date, confirming its liquidity and accessibility to investors.
The index is rebalanced quarterly — in March, June, September and December — to ensure it continues to reflect the U.S. equity market accurately.
S&P 500 index history
The history of the S&P 500 index dates back to 1957 when it was introduced by the financial services company Standard & Poor’s. But backtested data for the index now goes back as far as Jan. 3, 1928.
The S&P 500 has been modified and expanded over the years. But its core function remains the same. The index provides investors and analysts with a comprehensive overview of the overall U.S. equity market.
The index has weathered various economic cycles, market crashes and bear markets. During the dot-com bubble, the index fell by 10.14%, 13.04% and 23.37% in 2000, 2001 and 2002, respectively. During the Great Recession, the index plunged by 39.23% in 2008.
Despite these drawdowns, the S&P 500’s robust historical performance is often used as a benchmark against which other investments are measured.
The S&P 500’s constituent companies have also changed to reflect the shifting landscape of the U.S. economy, from a manufacturing-heavy list in the earlier years to a more diversified group today that includes technology, health care and financials as its largest sectors.
Some of the world’s largest and most successful companies, such as Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG) and Amazon (AMZN), lead the index, making it a key reference point for investors globally.
S&P 500 index return history
The following section provides the S&P 500’s historical annual total returns over the past decade.
Total returns include not only price appreciation but also reinvested dividends. In contrast, price returns account for only the change in the index’s price, excluding dividends.
Focusing on total returns provides a more comprehensive picture of the S&P 500’s historical performance in terms of compound growth.
How do you invest in the S&P 500?
Investing in the S&P 500 is a straightforward process thanks to various financial products that track its performance. Different asset managers offer index-linked products that mirror the S&P 500, making it easy for investors to gain exposure to this benchmark index.
S&P 500 index funds
One popular option is investing in mutual funds that aim to replicate the index’s performance. These funds pool money from multiple investors to buy the stocks in the S&P 500, essentially mimicking the index’s composition and weightings. A popular example is the Vanguard 500 Index Fund Admiral Shares (VFIAX).
S&P 500 ETFs
ETFs are another commonly used instrument for investing in the S&P 500.
S&P 500 ETFs are similar to mutual funds but are traded on stock exchanges throughout the day like individual stocks. While these investment vehicles also track the S&P 500, they usually have lower fees than mutual funds. That makes them a cost-effective way to invest in the index. A popular example is the SPDR S&P 500 ETF Trust (SPY).
For those interested in derivatives, options and futures contracts on the S&P 500 are also available. Options give investors the right, but not the obligation, to buy or sell the index at a predetermined price before a specific expiration date. Futures obligate the investor to buy or sell the index at a predetermined price at a specified time in the future.
Options and futures can be used for hedging risks or speculation but come with additional risks and complexity.
Whether you’re looking for long-term exposure to the U.S. stock market or short-term trading strategies, there are multiple ways to invest in the S&P 500. Each investment vehicle has its own set of characteristics, fees and risk exposures.
What are S&P 500 futures?
S&P 500 futures are among the most traded futures on the U.S. markets. This type of future is a derivative contract that provides an investor with a price based on an expected future value of the index.
These futures were first introduced by the Chicago Mercantile Exchange in 1982. All S&P futures are products of the CME and trade electronically.
