Some argue that the S&P 500 is actually an actively managed index

Also run by S&P Dow Jones Indices, the S&P 500 tracks 500 large US firms using market-value weighting. Many analysts view it as a more accurate gauge of the American economy.

Stocks are added to the S&P 500 by a secret selection committee that meets regularly to assess which companies can remain in the index, which companies need to be added, and which companies no longer meet the criteria. The members of the committee used to be public, but S&P Global decided to keep its members confidential after companies sent packages, letters, and gifts to try to make it into the index.

The S&P 500 is a market-cap-weighted index, which means companies with larger market capitalizations have a larger impact on the index's overall performance. Many of the top companies in the index are currently tech companies—including Nvidia, Microsoft, Alphabet, and Apple—that all have large investments in artificial intelligence. As a result, some analysts are concerned that the index is overly exposed to risky AI investments.

Since the index represents a broad range of diverse industries, it's become a proxy for the market itself and a common benchmark for investors to compare returns and performance patterns against. Generally speaking, when someone says a stock is under- or out-performing the market, that actually means under- or out-performing the S&P 500. The S&P 500 is exchange-agnostic, and includes companies listed on both the NYSE and Nasdaq.

When the S&P 500 index was released in 1957, it was helpful for investors, but not necessarily profitable. S&P Global now makes more than $1B a year just from selling its index data. Alongside its other services, like credit ratings, S&P Global makes more than $14B a year.

Unlike previous indexes from S&P, the S&P 500 could be computed in real time using computer technology that tracked stock tickers across stock exchanges. This innovation is partly what led to 500 companies being listed on the index, a huge increase from the 90 companies in S&P's flagship index when the company had to do all the analysis by hand.

The Dow and S&P 500 are both indexes meant to provide a broad representation of the economy. The Dow has 30 companies and is weighted by share price, while the S&P 500 has 500 different companies weighted by market capitalization. Since the indexes are so different, investors don't always agree on which index is a better representation of the economy—though the two move in the same direction more than 90% of the time.

While the decision to add a company to the index is ultimately up to the selection committee, any prospective company has to meet some criteria to be considered. To join, the company must have been profitable for the last four quarters, must have a market capitalization exceeding $22.7B, and meet certain requirements around tradeable stock availability (or float).

Since some large companies have dual-class stock structures (like Alphabet and Fox Corporation), there are multiple listings on the S&P 500 for the same company. S&P Global has banned and then reversed bans on companies with dual-class structures multiple times since first allowing dual-class stocks in 2014.

This raised concerns for investors about the index's risk exposure. As many large tech companies continued posting record highs, analysts argued that the top-heavy index was becoming less representative of the economy as a whole.

The S&P 500 is primarily composed of large-cap companies. The idea is that the index provides a big-picture view of the economy by assessing the performance of many of the largest public companies across different industries. The median market capitalization of companies listed on the S&P 500 is around $40B.

From the 1941 merger of Standard Statistics and Poor's Publishing to the creation of the S&P 500 in 1957, the company that created the famous index has long been a leader in financial intelligence.

State Street, a popular ETF issuer, is responsible for the SPDR S&P 500 ETF. This fund trades under the SPY ticker, and State Street maintains a web page with key facts and figures on SPY. For instance, its expense ratio is 0.0945%, or $9.45 on an initial $10K investment.

Since the S&P 500 is considered a bellwether index (meaning it represents the health of the US economy), its value is important for investors in both bull and bear markets. The S&P 500 has been impacted by recessions and downturns, from the 1970s oil crisis to the dot-com crash of the early 2000s.

David Blitzer, the former index chair at S&P Global, earned the nickname "gatekeeper" of the stock market after helping decide which companies made it into the S&P 500 for 24 years. Blitzer became a legend in the world of indexing and has a reputation for being even-tempered and always wearing a bow tie.

High fees tend to eat away at whatever edge professional managers accrue, resulting in most such funds performing worse than their underlying benchmark indexes like the S&P 500.

John Bogle, the founder of The Vanguard Group, created a fund that tracked the S&P 500 in 1976. That fund created an unprecedented opportunity for individual retail investors, brought down fees across the board, and popularized the belief that passive, low-cost index fund investments would outperform actively managed portfolios long-term.

Unlike many indices, the Dow has no strict rules for inclusion. A small committee at S&P Dow Jones Indices uses judgment—favoring companies with strong reputations, steady growth, and broad investor interest.

With only 30 companies and a price-weighted formula, skeptics say the DJIA underrepresents vast sectors of the market. They claim it is outdated, though its close correlation with the broader S&P 500 keeps it relevant.

In a given year, the value of the S&P 500 can significantly fluctuate. An intra-year drawdown is the most significant difference between the index's peak and lowest point.

Stock markets and the indexes that track their biggest companies tend to ebb and flow, with long growth periods punctuated by shorter recessions. Track the 60-year history of one of the most common stock market indexes, the S&P 500, with this data visualization. The chart highlights the long-term durability of markets despite appearance of short-term volatility.

Private equity often attracts investors who can afford to tie up capital for long periods of time in exchange for higher returns than traditional investments. For many years, private equity at least tracked with the S&P 500 in terms of returns to investors, but in 2024 and 2025, it underperformed and posted declining returns.

Instead of purchasing individual stocks and bonds, new investors may want to start in funds that track an index—like the S&P 500—or that hold a group of themed stocks.

Unlike most indices, which weigh companies by market value, the DJIA is price-weighted—meaning higher-priced stocks have more influence on its movements. As a result, a company’s share price matters more than its overall size.

The Dow Jones Industrial Average tracks 30 large U.S. companies from all major U.S. sectors except for utilities and transportation. It's considered a bellwether of the U.S. economy.

By holding large ownership positions, which often come with leveraged access to a company's board or the ability to force a shareholder vote, activist shareholders can change a company's corporate governance, leadership, and overall direction. Critics argue that activist shareholders hurt companies in the long term by prioritizing short-term higher shareholder returns over sustainability and growth efforts.

This 3,000+ company index stands in contrast to the Nasdaq 100, which only includes 100 of the most influential non-financial companies traded on the exchange. These are the two most commonly used indices for Nasdaq investments.

Dividend aristocrats are considered the best of the best on the S&P 500—all with market capitalizations above $3B, more than $5M in daily trading volume, and consecutive dividend growth for a minimum of 25 years. Some examples of dividend aristocrats are Coca-Cola, Procter & Gamble, and Walmart.

While more people invest in stocks than bonds, experts say owning both can make for a healthier portfolio. Stocks are considered a riskier investment than bonds, but tend to have higher returns. While bonds might be the safer option, they won’t grow your wealth as quickly.

This index was created in 1985, over a decade after the Nasdaq first launched. The companies on the index must meet certain criteria, including having a minimum average daily trading value of $5M.

Since 1928, the DJIA has included 30 firms. Today's group spans technology, healthcare, and finance—with Apple, Microsoft, JPMorgan Chase, Pfizer, and Coca-Cola among its most recognized components.

In order to ensure that retirees received all the retirement funds a company or other institution may have promised them, pensions were often limited to investing in run-of-the-mill assets like government securities, investment-grade bonds, and blue-chip stocks. But as market conditions have evolved, pensions are increasingly being invested in a wider range of assets, including alternative investments.