What Is the S&P 500?

The S&P 500 is a stock market index that tracks 500 leading US companies, weighted by the market value of their publicly available shares. S&P Dow Jones Indices, which runs it, describes it as covering approximately 80% of available US market capitalization, which is why it is the most common yardstick for “the US stock market.”

The index launched in its 500-company form in 1957. Because a few companies have more than one class of shares in it (Alphabet, for example), it usually holds slightly more than 500 stocks.

How a company gets in

Companies are chosen by an index committee, not automatically by size. Under the S&P U.S. Indices methodology as of 2026, a company added to the index generally needs:

• US domicile, judged on factors such as where its assets and revenue are, its SEC filings, and its listing.
• Size: a total market cap of at least US$22.7 billion, the guideline set in July 2025 and reviewed quarterly.
• Public float: at least 10% of its shares available to the public.
• Liquidity: enough trading activity relative to its size.
• Profitability: positive as-reported (GAAP) earnings in the most recent quarter and over the most recent four quarters combined.

Meeting the criteria does not guarantee a place, and these rules apply to additions: existing members are not removed the moment they dip below a threshold.

How the weighting works

Each company counts in proportion to its float-adjusted market cap, the value of its shares that are available to trade. See market cap.

Imagine a three-company index:

Company	Float-adjusted market cap	Weight
A	$300 billion	60%
B	$150 billion	30%
C	$50 billion	10%

If A rises 10% and the others stay flat, the index rises about 6% (60% x 10%). The largest companies drive most of the movement. The full arithmetic, and the contrast with the price-weighted Dow, is in what is a stock index.

What it is not

• It is not something you can buy directly. It is a list and a calculation. People invest in it through index funds and ETFs that track it.
• It is not the whole market. It leaves out most small and mid-sized US companies and every non-US company. Canada’s broad equivalent is the S&P/TSX Composite.
• It is not equally spread. A handful of very large companies can make up a big share of the index.

Many active fund managers are measured against it, and the results are covered in active vs passive investing.

Related: What Is a Stock Index? · How Index Funds Work · Active vs Passive Investing