Stock Market 101 – What is the S & P 500 and what it stands for?
The S & P 500 is a stock market index consisting of 500 large companies from different industries. The index is owned and maintained by Standard & Poor's (S & P), a division of McGraw-Hill. The S & P 500 is part of two larger index S & P 1200 and S & P Global 1500.
All companies included in the S & P 500 Index are traded on the two largest US stock markets – the New York Stock Exchange and the Nasdaq. Standard & Poor's 500 companies are considered to be leaders in their industry and are therefore one of the most common stocks on the American Stock Exchange. Some companies include Exxon Mobile, AT & T, Microsoft, and Procter & Gamble.
It was created on March 4, 1957 as an extension to the existing S & P 90. Advances in computer technology at the time allowed the index to be calculated and disseminated exponentially by real-time. Since its inception, the S & P 500 has been used as a benchmark to guide the future of the market and the US economy. The Dow Jones Industrial Average (DJIA) is the most notorious index of US equities, but most of the Dow Jones index contains more than 30 companies, and most believe the S & P 500 is more representative of the US market.
The companies included in the S & P 500 Index are selected by the S & P Index Committee. Most of the companies included in the index are US companies, but a handful of international companies are widely traded in the United States. In the future, the index committee announced it would only increase the number of companies in the United States. The S & P 500 is a market-weighted index – the weight of each stock in the index is directly proportional to the market value
There are two ways to invest in the S & P 500 index. The first is the purchase of individual stocks. The second is through the purchase of exchange-traded funds (ETF) stocks. One form of ETF is called SPDR or Standard & Poor's depository receipt. SPDR's average daily trading volume is the highest in any US stock more than 200 million shares a day. Another form of ETF is iShares S & P 500, which is similar to SPDR, but they include equal shares of all members of the index
widely considered to be the single best indicator of the US stock market, the world-renowned index should Observe if you invest. Although Standard & Poor's focuses only on large caps on the stock market, it is also an ideal model for the entire market.
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