Plain-English definitions, reviewed by an independent investor
S&P 500
The S&P 500 is a cap-weighted index of 500 large U.S. companies, the default gauge of the American market.
The S&P 500 is a cap-weighted index of 500 large U.S. companies, the default gauge of the American market.
(Cap-weighted; ~80% of U.S. market value)
Why it matters
It is the benchmark most U.S. investors measure themselves against.
Common confusion
Being cap-weighted means the biggest few names dominate the index’s moves.
Frequently Asked Questions
How to invest in the S&P 500?
Via a low-cost ETF or index fund that holds all 500 names.
S&P 500 vs Dow?
The S&P covers 500 firms by size; the Dow is 30 price-weighted stalwarts.