S&P 500 Index
The S&P 500 (^SPX) index is a basket that contains the stocks of 500
Large-Cap corporations. Most of these corporations are American and they
are largest public companies which are traded on the biggest US Stock
Market Exchanges - on the New York Stock Exchange (NYSE) and Nasdaq
Exchange. The S&P 500 index consists of 500 leading companies in the
U.S. economy and is considered as the best single gauge of the U.S
equities market. The S&P 500 index is the second most watched index
after the DJI (Dow Jones Industrials Index).
The history of the S&P indexes goes back to 1923 when the S&P 90 (backed
of 90 public companies) index was introduced and was published on the
daily basis. An index based on the 423 public companies was also
published, but on a weekly basis only. With development of the computer
industry it became possible to calculate broader indexes in real time
and on March 1957 the S&P 500 index was introduced to the world. Later
the index has been extrapolated back in time.
Similarly to the Dow
Jones Industrials Index (DOW 30) the companies included into the
index are selected by the committee. The committee selects large
publicly traded companies with high liquidity, those that represent
different industries in the U.S. economy and are traded on the New York
Stock Exchange and
Initially the S&P 500 index was market value weighted which means that
companies with greater total market value (price time's number of
outstanding shares) would affect index price stronger than the companies
with smaller total market value. In 2005 the index has been converted to
the float weighted â€“ only those shares that are available to public
trading are counted.
There are various ways of investing into the S&P 500 index. An investor
may purchase individual stocks from the S&P 500 index basket as well as
the shares of the exchange traded funds (ETFs) that track the index.
Standard & Poor's Depositary Receipts (SPDRs, commonly called
"spiders"), is one of the most popular and most traded ETF (after QQQQ which tracks the
100 index). The SPDRs is traded under the SPY
ticker symbol. There are other securities that allow to invest into the
S&P 500 index: iShares S&P 500 (symbol:IVV), Rydex and ProFunds S&P 500
funds, options on the S&P 500, SPY options, S&P 500 e-mini futures and
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