Standard & Poor’s 500 Index

The Standard & Poor’s 500 Index (S&P500) is made up of a list of 500 stocks in the New York Stock Exchange (NYSE) and in NASDAQ. The 500 stocks included in the S&P500 Index can also be broken down within the following indexes.

• S&P Industrial Index which is made up of 400 industrial stocks

• S&P Transportation Index which consists of 20 companies

• S&P Utilities Index which is formed by 40 companies

• S&P Financial Index which is comprised by40 companies

The most quoted S&P index is the S&P 500 Index. The S&P 500 Index is an index of compared  valuables in the market which is estimated by calculating the total market capitalization (value) and dividing it by the market capitalization in the base year, and then multiply the resulting number by 10. The increasing or decreasing percentage of the total value of the market from one day to the next represent the change in the index.

With 500 stocks the S&P 500 Index is more representative than the DJIA that only takes into account 30 stocks. The S&P 500 Index occasionally adds and or subtracts stocks to keep a wide representation of the economy.

The S&P 500 Index is an important evaluator of the largest stocks in the market which is confirmed by the increasing popularity of the S&P Indexed Mutual Funds ( Mutual funds that keep portfolios of stocks designed to compare the performance of the S&P 500 Index.) These mutual funds stood out over the majority of mutual funds in activity  in the year 1998.

In the first place, because many of the mutual funds invested valued and low capitalization stocks that did not have a good performance considering those 50 stocks with great growth in the S&P 500 Index. Since 1995 to 1999 the DJIA as well as the S&P 500 Index doubled to later decrease to half its price in the market of 2000-2002. The largest stock market of low capitalization were left behind and did not participate in the market during 4 years (1995 – 1999.)