UK Accounting Glossary
The S&P 500 Index is a well known and followed equity index representing 500 leading large-sized US companies in various key industries. The S&P 500 Index goes back to the early 1920s but officially included 500 companies in 1957. The S&P 500 Index represents over 75% of the entire U.S. equity market so it is considered a benchmark for the entire US market. The S&P 500 Index is weighted by market capitalization. The S&P 500 Index includes large-cap stocks with a market capitalization above US$5 billion dollars. To be included in the S&P 500 Index, a company must be a US company with strong financials (i.e. as reported earnings must be positive for 4 quarters in a row). An S&P 500 Index company must have good liquidity. An S&P 500 Index company must also be an operating type of company (i.e. no holding companies for example but REITs are allowed). The S&P 500 index is calculated by Standard and Poor’s in accordance with published specifications. The S&P 500 Index is reconstituted on an as-needed basis by S&P economists and index experts, members of the S&P Index Committee. The S&P 500 Index is part of the S&P Global 1200 Index. Various Exchange-traded Funds (ETF), futures, options, and mutual funds offer investment vehicles to trade the S&P 500 Index.
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This glossary post was last updated: 5th February 2020.