What Is Standard & Poor’s (S&P)?
S&P is a leading index provider and also it is the source of the independent credit ratings. It is the foundation which was started in the year of 1860. It was the organization set up as the institution which offers the financial market intelligence. There are many areas in which S&P is working; S&P global divisions include S&P Global ratings, S&P Global Market Intelligence, S&P Dow Jones Indices and also the S&P Global Platts. Here is everything you want to know about S&P 500 index.
Standard & Poor is very well known over the globe and it is very much popular for its Bench mark indices, also it is popular for the credit rating having its offices in across 26 countries over the world. There are many of the indices offered by S&P, but the most popularly known is only one i.e. S&P 500 Index, which was established in March 1957.
What is S&P 500 Index (Standard & Poor’s 500 Index)?
S&P 500 Index (Standard & Poor’s 500 Index) is an index which is a market capitalization weighted index of the companies, these companies include the 500 biggest companies in the terms of market value which are publically traded in the United States. It was the first index which was published daily.
It is the only one index which comprises of the large scale U.S. equities as the other index such as Dow 30 and Russell 2000 Index, which are the small cap index. It is the index which as per most of the investors is the index giving the true and fair situation of the U.S.’s stock market than any other as it comprises of the most no of shares in any index i.e. it comprises of 500 shares compared to the 30 in the Dow’s 30 industrials.
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The S&P 500 Index (Standard & Poor’s 500 Index) is the industrial investor’s preferred index as it provides the breadth and depth compared to any other index. The Dow’s 30 have been keeping the retail investors attracted of the U.S. stock market.
There is also difference in using the method of valuation of the price in different indices, such as the S&P 500 Index uses the market capitalization weighting method, which gives the higher percentage allocation to companies. Whereas on the other hand the DJIA follows the price weighted index which provides the higher stock price to the higher index weighting. Here also the S&P 500 Index is better as the structure which is most common in the United States is market capitalization. If you want to know how to invest in shares than there it is.
Some other S&P Index
The S&P 500 Index is one of the members of the S&P Global 1200 family of the indices. Other popular Indices available in the same family are as follows, S&P Midcap 400, which is representing the companies which are in the range of mid cap and the other member is S&P Small cap 600, which is representing the small cap companies. The indices such as S&P 500 Index, S&P mid-cap 400 and S&P small cap 600 combines to create a united states all capitalization indexes which are highly popular with the name of S&P Composite 1500.