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The S&P 500 index
Since March 1957· Concept
Fact, law or dataA rule, statute, definition or measured number.
The S&P 500 tracks 500 of the largest US companies, weighted by market value, and is the standard yardstick for US stocks.
See it on the Money & Finance map →How it works
Standard & Poor's launched it on March 4, 1957. A committee at S&P Dow Jones Indices picks members: US companies above a size threshold, with enough trading and positive recent earnings. It covers about 80% of US stock market value. Bigger companies count more, so in 2025–26 a handful of tech giants such as Nvidia, Microsoft and Apple drove much of its moves. With dividends reinvested it has returned about 10% a year on average since 1957, with large swings.
Why it matters
It is the benchmark most fund managers are judged against and the most-tracked index in the world, through funds like SPY (1993) and Vanguard's 500 fund (1976).
Facts, rules and data
S&P Dow Jones Indices publishes the methodology, members and daily values. Individuals get exposure through S&P 500 index funds or ETFs, some charging about 0.03% a year.
Debates and risks
Whether its heavy concentration in a few AI-linked giants makes it riskier than its history suggests, and whether equal-weight versions are better gauges.
Connections (3)
▸The S&P 500 index is the main benchmark among Stock indexes: the Dow, S&P 500 and NasdaqFact, law or data
The connection
Among indexes, the S&P 500 is the main yardstick: it covers about 80% of US stock market value, is weighted by company size, and is what most managers are judged against. The Dow is older but has only 30 price-weighted stocks; the Nasdaq Composite tilts toward tech.
When and why
Launched by Standard & Poor's on March 4, 1957; now run by S&P Dow Jones Indices, owned mainly by S&P Global.
How we know
S&P's yearly survey counts trillions of dollars indexed to or benchmarked against it; S&P's SPIVA reports use it as the standard comparison.
Debates and risks
Whether a benchmark so concentrated in a few tech giants still represents the broad market, or an equal-weight version would serve better.
▸Index funds and passive investing commonly track The S&P 500 indexFact, law or data
The connection
The S&P 500 is the most widely tracked index. A fund following it holds all 500 companies by market value, so growing firms automatically get bigger weights. When a stock joins the index, as Tesla did in December 2020, index funds must buy it, often pushing up its price.
When and why
Vanguard's first index fund tracked the S&P 500 in 1976, as did SPY in 1993; today Vanguard, BlackRock's iShares and State Street run the largest.
How we know
Fund prospectuses name the index; S&P Dow Jones Indices' annual survey counts trillions of dollars indexed to it.
Debates and risks
Whether heavy indexing inflates stocks added to the index, and whether its concentration in a few giants weakens diversification, are argued.
▸The AI stock boom and Big Tech concentration lifted Big Tech to about a third of The S&P 500 indexFact, law or data
The connection
Because the S&P 500 weights companies by market value, soaring AI-linked stocks automatically took bigger slices. By 2025 the Magnificent Seven were about a third of the index and supplied more than half its gains in 2023 and 2024. Index fund buyers became heavy AI investors whether they meant to or not.
When and why
2023–2025; Nvidia, Microsoft, Apple, Alphabet, Amazon, Meta, Broadcom and Tesla, with Nvidia alone about 7–8% of the index by late 2025.
How we know
S&P Dow Jones Indices weight data; the top ten's share, near 40%, exceeds the roughly one quarter they held at the 2000 dot-com peak.
Debates and risks
Whether a cap-weighted index this concentrated is still diversified, and whether equal-weighted versions, which lagged, will catch up.