US 500 (S&P 500) Explained: Composition, Weighting, and Historical Performance

Pepperstone
Market Analyst
4 Apr 2024
Delve into the intricacies of the US 500, exploring its composition, weighting system, selection process, and historical performance, making it an essential resource for investors seeking to understand this critical market benchmark.

US 500

The US 500 (also known as SPX500, US SPX 500 or SP500) – more commonly known as the S&P 500, or the Standard and Poor’s 500 – tracks the performance of the 500 largest companies listed on the NYSE, Nasdaq and BZX exchanges. In short, the index tracks the performance of the biggest US companies. The index is, perhaps, the most important and most followed in the world, given that it includes around 80% of the total market cap of publicly listed US companies.

Weighting and Composition

The index is a market capitalisation weighted index, meaning that the larger a company’s market cap, the greater the weight that it has in the index. As of the start of 2024, the 10 largest stocks in the index comprise around a third of the index’s total weight.

Components of the US 500 are not selected by any strict rules-based system, and instead are decided by a committee at S&P Dow Jones Indices. Typically, however, new additions to the index are considered based on their market cap, trading volume, the exchange upon which they are listed, and the country in which the stock in question has its primary listing. The index is typically rebalanced on a quarterly basis, after market close on the third Friday in March, June, September, and December each year.

Historical Performance

Historically, the US 500 has tended to perform well on an annual basis, as the below shows. Of course, past performance is no guarantee of future results.

Gaining Exposure to the S&P 500

The S&P 500 is a stock market index, not a directly investable asset. However, you can still participate in its performance through various investment options. These include:

  • Mutual funds and ETFs: These track the S&P 500, offering a diversified way to invest in the U.S. stock market.
  • CFDs (contracts for difference): These are financial instruments used for trading, allowing speculation on the price movements of the S&P 500.

Important Note: CFDs are complex instruments and carry a high risk of losing money quickly due to leverage. Make sure you understand how CFDs work and can afford to take the high risk involved before trading them.

Preview

By weighting, the biggest 50 stocks in the index are as follows:

PositionStockTickerWeighting as of 01/07/2024
1Microsoft CorpMSFT7.31%
2Apple Inc.AAPL6.70%
3Nvidia CorpNVDA6.63%
4Amazon.com IncAMZN3.94%
5Meta Platforms, Inc. Class AMETA2.47%
6Alphabet Inc. Class AGOOGL2.37%
7Alphabet Inc. Class CGOOG1.98%
8Berkshire Hathaway Class BBRK.B1.60%
9Eli Lilly & Co.LLY1.57%
10Broadcom Inc.AVGO1.50%
11Jpmorgan Chase & Co.JPM1.24%
12Tesla, Inc.TSLA1.19%
13Exxon Mobil CorporationXOM1.12%
14Unitedhealth Group IncorporatedUNH0.97%
15Visa Inc.V0.91%
16Procter & Gamble CompanyPG0.85%
17Costco Wholesale CorpCOST0.82%
18Mastercard IncorporatedMA0.79%
19Johnson & JohnsonJNJ0.76%
20Home Depot, Inc.HD0.74%
21Merck & Co., Inc.MRK0.71%
22Abbvie Inc.ABBV0.65%
23Netflix IncNFLX0.64%
24Walmart Inc.WMT0.63%
25Chevron CorporationCVX0.58%
26Bank of America CorporationBAC0.58%
27Advanced Micro DevicesAMD0.56%
28Coca-Cola CompanyKO0.54%
29Salesforce, Inc.CRM0.53%
30Adobe Inc.ADBE0.53%
31Pepsico, Inc.PEP0.50%
32Oracle CorpORCL0.49%
33Qualcomm IncQCOM0.47%
34Thermo Fisher Scientific, Inc.TMO0.46%
35Linde PlcLIN0.46%
36Wells Fargo & Co.WFC0.43%
37Cisco Systems, Inc.CSCO0.42%
38Applied Materials IncAMAT0.42%
39Accenture PlcACN0.41%
40Mcdonald's CorporationMCD0.40%
41The Walt Disney CompanyDIS0.40%
42Intuit IncINTU0.40%
43Abbott LaboratoriesABT0.39%
44General Electric CompanyGE0.38%
45Verizon CommunicationsVZ0.37%
46Danaher CorporationDHR0.36%
47Caterpillar Inc.CAT0.35%
48International Business Machines CorporationIBM0.34%
49Comcast CorpCMCSA0.33%
50Intel CorpINTC0.28%

The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our clients.

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