What Is the S&P 500?

When a news anchor says "the market was up today," they usually mean one specific thing: the S&P 500, an index that tracks approximately 500 of the largest publicly traded companies in the United States. An index itself isn't a company or something you can directly buy — it's a measurement tool, a single number calculated from the combined stock prices of all 500 companies, designed to represent the health of the U.S. stock market (or at least its largest companies) in one glance.

The S&P 500 is "market-cap-weighted," meaning companies with a larger total market value count for more of the index's movement than smaller ones — a big price swing at a company like Apple or Microsoft moves the index far more than the same percentage swing at one of the index's smallest members. Standard & Poor's introduced the index in its current roughly-500-company form in 1957, building on a smaller 90-stock index that dated back to 1926.