At a glance
- Provider
- S&P Dow Jones Indices; maintained by an Index Committee of full-time S&P DJI staff[1]
- Launch / base
- Launched March 4, 1957; first value January 3, 1928; base period 1941–1943 = 10[1]
- Constituents
- 500 constituent companies (some have more than one share class listed)[1]
- Weighting
- Float-adjusted market capitalization[1]
- Rebalancing
- Quarterly, after the close on the third Friday of March, June, September and December; additions and deletions as needed[1]
- Region / currency
- U.S.-domiciled large-cap companies; calculated in U.S. dollars[1]
Index levels and returns change every trading day and are not shown here. Check the provider's own page for current figures.
Quick answer
The S&P 500 is an index of 500 large U.S. companies run by S&P Dow Jones Indices. Each company counts in proportion to its float-adjusted market value, a committee decides who joins, and share counts are updated every quarter [1].
Key points
- The S&P 500 tracks the large-cap segment of the U.S. stock market, not the whole market.
- Bigger companies, measured by the market value of shares available to the public, carry more weight.
- A committee chooses members using published rules on size, liquidity, float and profitability.
- A divisor keeps the index level from jumping when companies are added, removed or reorganized.
- You cannot buy the index itself; funds that track it hold the stocks and charge fees.
#What does the S&P 500 measure?
An index is a measuring stick: a basket of stocks chosen to represent part of a market, with one number that summarizes how the basket moved [2]. S&P Dow Jones Indices, the provider, says the S&P 500 "measures the performance of the large-cap segment of the U.S. market" and is "composed of 500 constituent companies" [1]. Large-cap simply means companies with a large total market value. For the general idea of an index, see what a stock market index is.
The provider's index page describes it as covering approximately 80% of available U.S. market capitalization [3]. That is a lot, but it is not everything: thousands of smaller and mid-sized companies sit outside it. Small companies are the job of other indexes such as the Russell 2000.
#Which companies can join the S&P 500?
Membership is not automatic. The methodology lists rules a company must meet before the Index Committee will consider it [1]. The committee meets monthly and makes changes as needed, announcing additions and deletions in advance [1].
| Rule | What it means | Requirement |
|---|---|---|
| Domicile | Where the company is legally based | Must be a U.S.-domiciled company |
| Listing | Where the shares trade | An eligible U.S. exchange, such as the NYSE, Nasdaq or a Cboe exchange |
| Size | Total market value of the company | US$22.7 billion or more (ranges reviewed at the start of each quarter) |
| Liquidity | How actively the shares trade relative to their float | Float-adjusted liquidity ratio of at least 0.75 when added |
| Float | Share of stock available to public investors (IWF) | Investable weight factor of at least 0.10 |
| Profitability | Earnings under U.S. accounting rules (GAAP) | Positive in the latest quarter and over the latest four quarters combined |
The committee also looks at sector balance, comparing each sector's weight in the index with its weight in the broader S&P Total Market Index [1]. The size threshold is reviewed every quarter, so the dollar figure above is a snapshot of one edition of the rulebook, not a permanent number.
#How is the S&P 500 weighted?
The S&P 500 is weighted by float-adjusted market capitalization [1]. Market capitalization is share price times shares outstanding (see market capitalization). The float adjustment uses an Investable Weight Factor, which S&P defines as "the percentage of total shares outstanding that are included in the index calculation" [4]. The share count is float-adjusted to reflect only available shares; the details sit in a separate S&P float adjustment methodology [1].
Worked example
Worked example: cap weighting with three made-up companies
A toy index holds three hypothetical companies. A: $100 share price, 1 billion shares, IWF 1.00. B: $50, 2 billion shares, IWF 0.80. C: $20, 1.5 billion shares, IWF 0.60. The divisor is set so the index starts at 1,000.
- A float-adjusted value ($100 × 1.0bn × 1.00)
- $100 billion → 50.51% weight
- B float-adjusted value ($50 × 2.0bn × 0.80)
- $80 billion → 40.40% weight
- C float-adjusted value ($20 × 1.5bn × 0.60)
- $18 billion → 9.09% weight
- Divisor ($198 billion ÷ 1,000)
- 198,000,000
- If only A rises 10%
- Index 1,050.51 (+5.05%)
- If only C rises 10%
- Index 1,009.09 (+0.91%)
The same 10% move matters about five times more when it happens in the largest company. That is what cap weighting means in practice.
Hypothetical companies and numbers, calculated in Python. Real S&P 500 weights change every trading day.
#What is the divisor and why does it change?
S&P's index mathematics guide explains that the total market value of the stocks is divided by a number "usually called the divisor" to scale it down to a readable level [4]. When a company is added or removed, or a corporate action changes the share count, S&P adjusts the divisor so that the index level does not jump up or drop down because of the change itself [4]. Only real price moves should move the index.
From share prices to one index number
#How often does the S&P 500 change?
There are two rhythms. Membership changes happen whenever the committee decides they are needed, with at least three business days' notice [1]. Separately, the index is rebalanced quarterly after the close on the third Friday of March, June, September and December, when share counts are brought up to date with the latest public filings [1].
Dates in the methodology
#How do people invest in an index like this?
You cannot buy an index directly. Index funds, either mutual funds or ETFs, try to track it, some by holding every stock and others by holding a sample [5]. Investor.gov warns that an index fund may not perfectly track its index and may underperform it because of fees, expenses and trading costs [5]. Read index funds explained for how these funds work and what they cost.
Common beginner mistakes
Calling the S&P 500 "the whole market"
It covers large U.S. companies only. Small companies and non-U.S. companies are outside it, so it is one slice of global stocks, not all of them.
Assuming 500 equal stakes
Each company counts by its float-adjusted market value, so the largest firms can move the index far more than the smallest ones.
Treating membership as a quality badge
Joining depends on size, liquidity, float and recent profits under published rules. It says nothing about whether a share is a good buy at today's price.
Ignoring concentration
Because weights follow market value, a few very large companies can make up a large share of the index. Check a fund's holdings before assuming it is spread evenly; see diversification explained.
What's the bottom line?
The S&P 500 is a committee-run, float-adjusted, cap-weighted index of large U.S. companies, rebalanced quarterly and calculated in dollars. Knowing those rules tells you what a move in the index does and does not mean. To see how a very different design works, compare it with the Dow Jones Industrial Average.
Frequently asked questions
Does the S&P 500 always hold exactly 500 stocks?
The methodology describes 500 constituent companies, but each publicly listed share class is evaluated separately, so a company with two listed share classes can appear twice. The number of share lines can therefore be slightly higher than 500.
Who decides which companies are in the S&P 500?
An Index Committee made up of full-time S&P Dow Jones Indices staff. It applies published eligibility rules and also uses judgment, for example on sector balance.
Is the S&P 500 price-weighted like the Dow?
No. The S&P 500 is weighted by float-adjusted market capitalization. The Dow Jones Industrial Average is price-weighted, which works very differently; see our Dow profile.
Does a company leave the S&P 500 if it reports a loss?
Not automatically. The methodology says the eligibility criteria are for addition to the index, not for continued membership. A member that substantially violates the criteria may be removed at the committee's discretion, and companies are also removed after mergers, acquisitions or major restructurings.
Sources
Grade A = primary source (regulator, government agency, official rulebook or the index provider's own documents). Numbers in brackets in the text point here.
- S&P Dow Jones Indices. S&P U.S. Indices Methodology (July 2026) (2026). Accessed 2026-10-03.A
- U.S. SEC — Investor.gov. Market Indices (glossary) (2026). Accessed 2026-10-03.A
- S&P Dow Jones Indices. S&P 500 index overview (2026). Accessed 2026-10-03.A
- S&P Dow Jones Indices. Index Mathematics Methodology (September 2026) (2026). Accessed 2026-10-03.A
- U.S. SEC — Investor.gov. Index Funds (2026). Accessed 2026-10-03.A
This page is general education, not personal financial, tax or legal advice. Figures in worked examples are hypothetical and calculated before taxes and fees unless stated. Rules and limits change; check the linked primary sources for the current version. How we check every page.
