Stock Market Indices (+)

The S&P500

The S&P500 or else "Standard and Poor's 500" is a major stock market index tracking the performance of the 500 largest companies listed on stock exchanges in the United States.

Highlights

The index covers approximately 80% of the available US market capitalization. The S&P500 is one of the factors used to forecast the direction of the US economy (Conference Board Leading Economic Index).

• Since its inception, the S&P500 compound annual growth rate has been approximately 9.8% (6.0% after inflation)
• The index weighting method is the free-float capitalization-weighted
• The P/E ratio in early 2024 was x22.1
• The dividend yield in early 2024 was 1.47%
• The stock market capitalization-to-GDP for the US markets is 174.7%

History

In 1923, the Standard Statistics Company began to rate mortgage bonds and developed its first stock market index of 233 US companies. The index was computed weekly. In 1926, they developed a 90-stock index, computed daily. In 1941, the Standard Statistics Company merged with Poor's Publishing to form the Standard & Poor's.

On March 4, 1957, the index was expanded to 500 companies and renamed as 'S&P 500 Stock Composite Index'. In August 1976, The Vanguard Group offered the first mutual fund to retail investors that tracked the S&P500 index. In April 1982, the CME began to trade futures based on the index S&P500. One year later, they began to trade options as well. Starting in 1986, the index value was updated every 15 seconds. In 2005, the S&P500 transitioned to a public float-adjusted capitalization-weighting.

• 'S&P Dow Jones Indices' manages the S&P500

Composition and Sector Allocation of the S&P500

As of early 2024, the nine largest listed companies on the S&P 500 accounted for 28.99% of the total market capitalization of the index.  In order of highest to lowest weighting:

• Apple. 7.46%
• Microsoft, 6.69%
• Alphabet (including class A & C shares), 3.41%
• Amazon.com, 2.72%
• Nvidia, 2.04%
• Berkshire Hathaway, 1.69%
• Meta Platforms, 1.50
• UnitedHealth Group, 1.34%
• Tesla, 1.32%

IT, health care, and financials together cover over 50% of the index. This is the sector allocation of the S&P500.

Table: S&P500 Sectors Weight

Defining Sector Types:

• Cyclical sectors are highly correlated to the market's expansions and contractions
• Defensive sectors are typically negatively correlated to the market cycle, offering stable profitability and dividend policy

Compare Brokers Trading the S&P500

These are some brokers to trade S&P500 via CFD contracts:

Resources:

• https://www.spglobal.com/spdji/en/indices/equity/sp-500/#overview
• https://en.wikipedia.org/wiki/S%26P_500
• https://www.visualcapitalist.com/complete-breakdown-of-sp-500-companies

■ The S&P500

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