S&P 500 Index
so what is it?
I will help you figure it out
S&P 500 (Standard & Poor’s 500 Index) is an American stock index that reflects the dynamics of the stock price of the 500 largest companies by market capitalization in the US market.
Compiled and published by Standard & Poor’s since 1957.
The sectoral composition of the index is determined by the following proportion: it includes 400 largest companies in the industrial sector, 20 leaders in the transport complex, 40 financial corporations and 40 organizations in the utility sector.
The methodology for selecting companies for the S&P 500 is based on the following principles:
– the company’s shares must be traded on the US stock exchanges NYSE and NASDAQ;
– market capitalization must exceed the minimum set by the agency. Today it is 5.3 billion US dollars;
- the company should not have losses for the year preceding the date of calculation of the index;
– assesses the degree of influence of the corporation on the weight of the sector in the index;
at least six months must have passed from the date of the IPO of the company;
at least 50% of the shares of this organization must be in public circulation.
A significant difference between the S&P 500 and the Dow Jones index is the selection of companies according to the free float criterion - the minimum liquidity threshold. It is determined by the company’s monthly trading turnover and by the date of the company’s valuation should be at the level of more than 250 thousand shares per month for six months. Thus, shares of companies included in the index should be freely traded on the market.
Due to its high degree of diversification and wide market coverage, the index is considered a barometer of the state of the American economy.