The Standard and Poor’s 500 (S&P 500) was introduced in 1957 as a stock market index in the United States of America. The market index measures the movement in the U.S equity market. The S&P 500 tracks the value of 500 corporations listed on the New York Stock Exchange market and the NASDAQ Composite.
The S&P 500 originally tracked the movement in the market capitalization of 233 stock prior to 1957. However, maintaining the daily quotes proved difficult without the use of modern technology. The S&P 90 was eventually created in 1928 to track the market movement of 90 stocks which consisted of 50 industrial stocks, 20 railway stocks and 20 utility stocks.
In 1957, when the S&P 500 was introduced, it consisted of 425 industrial stocks, 60 utility stock and 15 railway stocks. All these stocks were being traded on the New York Stock Exchange and made of about 90% of the total market capitalization.
Over the years the S&P 500 has been made more responsive to changes in the stock market. As at today, the index tracks the average movement of 500 of the largest companies in the U.S Economy. Companies featured in the market index include; Alaska Air Group, Alphabet A, Amazon, Cisco and Discovery Communications just to mention a few.
Sources:
Investopedia. (2020, March 7). What Is the History of the S&P 500? https://www.investopedia.com/ask/answers/041015/what-history-sp-500.asp/
The Hidden History of the S&P 500. (n.d.). The Investor’s Field Guide. Retrieved August 14, 2020, from http://investorfieldguide.com/2014825the-hidden-history-of-the-sp-500/
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