The S&P 500 (Standard Poor’s 500) is a stock index created in March 4th, 1957. It measures the leading 500 publicly traded companies in the U.S. Like the Dow Jones Index, it is often used to measure the health and well-being of the stock market, but also measures the strength of the top companies in the United States.
Standard & Poor’s Corporation is a financial organization that publishes several financial reports and services, which include corporation records and stock reports.
Today, the S&P 500 plays an important role in the stock market. Companies in the S&P 500 change quarterly as they are reevaluated based on share counts in public filings. As of April 2024, to be included into the S&P 500, companies must have a Market Capitalization of at least $18 billion.
ETFs
S&P 500 ETFs are very common investment choices for many portfolios. Today, one popular ETF, Vanguard S&P 500 ETF (VOO), has investors’ attention. As of September 9th, the stock is trading around $502/share. This is a six-month increase of about 6.88% from its trading price of $411 on March 11, 2024. The S&P 500, which is trading around $5,47 as of 9/9, has increased 6.91% in the same period. While other common ETFs are tied to the S&P 500, many understand that to match the market’s growth, investing in the companies of the S&P 500 often leads to positive results.
S&P 500 Growth
In the last five years, the S&P 500 has grown 83.9%. This means that if you were to invest $1,000 into the S&P on September 9th, 2019, your money would now be worth $1,839. When compared to some companies on the index, we can see that this number is a good average of one’s potential return. Apple has grown 312% over the last five years, trading at around $55 five years ago, and hitting $220 today. Apple is regularly at the top of the S&P 500 due to its larger market size and value as a company.
We will see a dip in returns as we expand from the number one company on the index and move to the top 50. S&P 500 Top 50 companies were trading at $2,368 five years ago, and are trading at $5,038 today. That is an increase of 112.75%, more than the S&P 500 as a whole, but less than its top performer Apple.
References
SPGlobal.com https://www.spglobal.com/spdji/en/documents/methodologies/methodology-sp-us-indices.pdf
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