The S&P 500 is one of the most recognizable stock market indices.
While the Dow Jones 30 Industrial Average is better known to the public, the S&P is often viewed as the best indicator for large-cap U.S stocks.
But... we bet you didn't know these 10 things about the S&P 500... starting with...
The S&P 500 Has 505 Stocks!
*all the facts here are true as of July 9, 2021
S&P itself says "the index includes 500 leading companies and covers approximately 80% of available market capitalization."
However, though there are 500 companies in the S&P 500, there are actually 505 stocks in the index!
This is because the following 5 companies have dual share classes, giving the S&P 500 5 additional tickers:
- 1Alphabet (which you know as Google): GOOG & GOOGL
- 2Discovery: DISCA & DISCK
- 3Fox Corporation: FOX & FOXA
- 4News Corp: NWS & NWSA
- 5Under Armour: UA & UAA
WHAT? There are 505 stocks in the S&P 500 Index $SPX $SPY -->
The S&P 500 Has Made People a LOT of Money... Even With the Ups and Downs
Here's a long-term chart going back to 1980:
The S&P 500 has made people a lot of money over the long run.
The index has averaged a return of around +10% per year throughout its history, meaning it doubles about every 7 years on average.
However, there have been plenty of ups and downs along the way.
We're sure you remember 2008, when the index fell fell over 37% due to the financial crisis.
When Congress rejected the bank bailout on September 29 of that year, the S&P 500 dropped -8.8% in a single day of trading. This was the biggest drop since the 1987 Black Monday crash, when the S&P collapsed -20.5%.
There's also been good times, like 2013, when it rose 32.4%.
And even with the COVID-19 pandemic, the S&P 500 rose 15.8% in 2020.
You Can't Trade the S&P 500
Since the S&P 500 is an index, you can't directly invest in it or trade it.
So how can people make money from it?
Simple -- they own or trade mutual funds and ETFs indexed to the S&P 500.
This means those mutual funds and ETFs model the S&P 500, buying and selling the same stocks in the same weightings to produce a return that's roughly equivalent to the index itself.
S&P says $11.2 trillion in assets (like mutual funds and ETFs) are benchmarked to the index.
The best known of these assets are:
- The SPDR S&P 500 Trust ETF, which trades under the ticker SPY
- The Vanguard 500 Index Mutual Fund, which trades under the ticker VFINX
However, you can trade futures and options based on the S&P 500.
S&P Is Actually a Company, and the Index Has a Long History
Let's talk some S&P 500 history and basics.
S&P stands for Standard and Poor's, which is now part of S&P Global Inc, which is now publicly traded under the ticker SPGI.
The S&P 500 was founded on March 4, 1957.
However, the S&P does have a predecessor index called the Composite Index, which contained 90 stocks.
Many historical data sources will mix the two together.
The S&P 500's Ticker Is NOT Always SPX
While traders often use SPX as a shorthand for the S&P 500 Index, the index' ticker is NOT always SPX in trading platforms and charting systems.
The official ticker is ^GSPC -- which is odd because people don't use it in the real world.
On platforms like Twitter and Stocktwits, traders will use $SPX when discussing the index.
Charting platforms like Trendspider also typically use $SPX:
To add to the confusion: there is actually an infrastucture company called SPX Corporation which used to trade under the ticker SPX.
Thankfully, SPX Corporation has since changed its ticker to SPXC.
The S&P 500 Does Not Let Every Big Company In, and There's a Revolving Door
The S&P 500 is not open to every large publicly-traded corporation.
Tesla (TSLA) was only added in December 2020 when it had a $600 billion market cap!
Here are the official requirements:
- Must have a $13.1 Billion Market Cap
- Majority of shares are in the public’s hands
- Must be highly liquid
- Traded on a major U.S stock exchange
- Publicly traded for at least one year
Here are some major companies which are NOT included in the S&P 500:
- Berkshire Hathaway Class A (BRK.A): $638 Billion Market Cap
- Zoom Video Communications (ZM): $113.2 Billion Market Cap
- Square Inc (SQ): $106.2 Billion
- Snap Inc (SNAP): $102.9 Billion
- Moderna Inc (MRNA): $93.7 Billion
And as you might imagine, when a new stock is added, an older one is removed. Companies are removed for all sorts of reasons, including mergers, banktrupcies, or simply falling down the totem pole in terms of size and prestige.
The S&P 500 Is a Market Cap Weighted Index
Not every stock in the S&P 500 impacts the index equally.
Apple (AAPL) is the top weighted stock and makes up 6.1% of the index.
That means 6.1% of the S&P 500's movements are dictated by Apple.
Just below, you'll see that the top 10 companies in the S&P account for 28% of the index. So it's quite top heavy.
And at the bottom, there is News Corporation Class B (NWS) at just 0.008% of the index.
April Is the Best Month for the S&P 500
April is the best month of the year for the S&P 500, based on data going back to 1980. The S&P 500 rises 2.0% in April on average, higher than any month.
You can see all the data here:
S&P 500 Returns By Month Since 1980
Month of the Year | Average SPX Return | % Positive |
|---|---|---|
January | 1.0% | 60% |
February | 0.2% | 62% |
March | 0.8% | 62% |
April | 2.0% | 74% |
May |
0.9% | 69% |
June |
0.3% | 62% |
July |
1.0% | 52% |
August |
0.2% | 60% |
September |
-0.7% | 48% |
October |
1.2% | 64% |
November |
1.8% | 71% |
December |
1.3% | 73% |
Data Source: Investing.com
The S&P 500 has been up in 31 of the 42 last Aprils, or 74%. That is the highest percentage of all months.
September is the worst month for the S&P 500, averaging a -0.7% decline since 1980. In fact, September is the only month that is down on average for the S&P 500.
The S&P 500's Top Names Are Ones You Know
Since the S&P 500 is a market cap weighted index, the names in the index are major companies you know.
Here are the top 10 stocks in the S&P 500 as of July 9, 2021:
Company | Ticker | Stock Price | Index Weight |
|---|---|---|---|
Apple | AAPL | $145.13 | 6.1% |
Microsoft | MSFT | $276.99 | 5.7% |
Amazon | AMZN | $3,720.99 | 4.4% |
FB | $348.62 | 2.3% | |
Alphabet Class A | GOOGL | $2,503.64 | 2.1% |
Alphabet Class C | GOOG | $2,591.49 | 2.0% |
Berkshire Hathaway Class B | BRK.B | $279.47 | 1.4% |
Tesla | TSLA | $651.19 | 1.4% |
Nvidia | NVDA | $795.72 | 1.4% |
JP Morgan | JPM | $154.97 | 1.2% |
The S&P 500 Index Price Calculation Is Right Here
Okay, we saved the most exciting fact of all for last... which is the S&P 500 Index Price calculation.
According to the Corporate Finance Institute, the S&P 500 Index Price is calculated as follows:
S&P 500 Index Value = The Total Free-Flat Market Cap / S&P 500 Index Divisor.
The S&P 500 Index Divisor is a number determined by S&P to keep the index consistent over time.
How Many of These Facts Did You Know?
If you knew more than 3, you're at the top 1% in terms of market knowledge.
Now go forth and share these exciting facts on Twitter or at cocktail parties!