S&P 500 Index
The S&P 500, or the Standard & Poor’s 500, is a stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ. The S&P 500 index components and their weightings are determined by S&P Dow Jones Indices. It differs from other U.S. stock market indices such as the Dow Jones Industrial Average and the Nasdaq Composite due to its diverse constituency and weighting methodology. It is one of the most commonly followed equity indices and many consider it the best representation of the U.S. stock market as well as a bellwether for the U.S. economy. The National Bureau of Economic Research has classified common stocks as a leading indicator of business cycles.
The S&P 500 was developed and continues to be maintained by S&P Dow Jones Indices, a joint venture majority-owned by McGraw Hill Financial that publishes many stock market indices such as the S&P MidCap 400, the S&P SmallCap 600 and the S&P Composite 1500. It is a capitalization-weighted index and has many ticker symbols, such as: ^GSPC, INX, and $SPX.
Standard & Poor’s introduced its first stock index in 1923. The S&P 500 index in its present form began on March 4, 1957. Technology has allowed the index to be calculated and disseminated in real time. The S&P 500 is widely used as a measure of the general level of stock prices, as it includes both growth stocks and value stocks.
The index reached a relative intraday high (which was not exceeded for over seven years) of 1,552.87 on March 24, 2000, during the dot-com bubble, then declined by approximately 50% to 768.63 on October 10, 2002 during the stock market downturn of 2002. On May 30, 2007, the S&P 500 closed at 1,530.23 to set its first all-time closing high in more than seven years. Although the index achieved a new all-time intraday high on October 11, 2007 at 1,576.09 following a record close of 1,565.15 on October 9, the index finished 2007 at 1,468.36 points. Less than a month later, it dropped to 1,400 and would not see similar levels again for five years.
In mid-2007, the savings and loan crisis spread to the wider U.S. financial sector. The resulting situation became acute in September 2008, ushering in a period of unusual market volatility, encompassing record 100-point swings in both directions and reaching the highest levels since 1929. On November 20, 2008, the index closed at 752.44, its lowest since early 1997. A modest recovery the following day still left the index down 45.5% for the year. This year-to-date loss was the greatest since 1931, when the broad market declined more than 50%. The market continued to decline from late 2008 to early 2009, surrounding the financial crisis of 2008. The index reached a nearly 13-year low, closing at 676.53 on March 9, 2009.
On March 23, 2009, the S&P 500 hit 822.92, marking a 20% gain. The Dow Jones Industrial Average soon followed. The close for 2009 was 1,115.10, making it the second-best year of the decade. Although the markets continued to experience significant volatility amid electoral and fiscal uncertainty, gains continued, and the 2012 close of the S&P 500 following QE3 was its third-highest ever, at 1,426.22 points. On March 28, 2013, it closed above the closing high from 2007. On April 10, it also closed above the intraday high from 2007. On May 3, 2013, more than 13 years since its first close above 1500, the S&P 500 closed above 1600 for the first time, at 1,614.42. On August 1, 2013, the S&P 500 closed above the 1700 mark for the first time. On October 21, 2013, the index set its current all-time intra-day high of 1,747.79, and closing record high of1,744.66 points.