History
In 1923 the ratings firm Standard Statistics built a weekly index of 233 companies; in 1941 it merged with Poor's Publishing to form Standard & Poor's. On 4 March 1957, once computers could calculate it in real time, the 500-stock cap-weighted S&P; 500 was born. It captured the market far better than the price-weighted 30-stock Dow and became the institutional benchmark.
Selection and composition
An S&P; committee picks US companies that meet a market-cap threshold (about $18 billion in 2024), recent profitability and liquidity requirements. Float-cap weighting means a few tech giants—Apple, Microsoft, Nvidia—make up a large share. Announced additions often jump as tracking funds must buy, the "index effect."
Investing and significance
In 1976 John Bogle's Vanguard launched the first retail index fund tracking the S&P; 500, and in 1993 SPY became the first US ETF. S&P;'s SPIVA reports show around 90% of US large-cap active funds lagged the index over 15 years. When the index's P/E is high, expected returns may be lower, and non-US investors also bear currency risk.
FAQ
- How many stocks are in the S&P; 500?
- About 503, because some companies list more than one share class.
- How can I invest in it?
- Through S&P; 500 ETFs such as SPY or VOO, or locally listed funds that track the index.
Sources reviewed: 2026-10-26
References
- S&P; Dow Jones Indices. (2024). S&P; U.S. Indices Methodology.
- Bogle, J. C. (2007). The Little Book of Common Sense Investing. Wiley.
- S&P; Dow Jones Indices. (2024). SPIVA U.S. Scorecard.