S&P 500 Index

How This Index Works

The S&P 500 is float-adjusted market-cap weighted: each company’s weight is its investable market value divided by the index total, so the largest companies move the index most. Membership is decided by an S&P Dow Jones Indices committee against published criteria (U.S. domicile, sufficient size and liquidity, a public float, and positive recent earnings) and changes a handful of times a year. The level itself is a ratio of total constituent market value to a proprietary divisor, which is why it reads in points, not dollars.

Frequently Asked Questions

What is the S&P 500?

An index of roughly 500 leading U.S. companies maintained by S&P Dow Jones Indices, and the default benchmark for the U.S. equity market. Despite the name it holds slightly more than 500 tickers, because a few constituents (Alphabet among them) list two share classes.

How do I invest in the S&P 500?

You cannot buy an index directly; you buy a fund that replicates it. The funds in the lineup above hold the same stocks at the same weights and differ mainly in expense ratio, structure, and share price.

Does the S&P 500 pay dividends?

The index itself does not pay anything, but most of its constituents do. Funds that track the index collect those dividends and distribute them to shareholders, typically quarterly, so an S&P 500 fund has a dividend yield even though the index level ignores payouts.

What does it take for a company to join the S&P 500?

Eligibility starts at the committee’s published bar: a market cap in the tens of billions (the threshold rises as the market grows), high trading liquidity, a majority public float, and profits in both the latest quarter and the trailing four quarters combined. Meeting the bar only makes a company a candidate; the committee still picks among candidates to keep sector representation balanced.

Can I convert S&P 500 points to dollars?

No. The level is a scaled ratio kept continuous by the divisor, so 7,500 is not a price of anything. Only percentage changes are meaningful, and they are what make the index comparable across time and against other indexes.