IN THIS LESSON

In-Depth Explanation

The S&P 500 (short for Standard & Poor's 500) is a stock market index that tracks the performance of 500 of the largest publicly traded companies in the United States.

Why It Matters

  • When people say “the market is up” or “the market is down,” they’re often referring to the S&P 500.

  • It helps investors track how large U.S. companies are performing as a group.

What Does It Represent?

  • The S&P 500 includes major companies across many industries like technology, healthcare, finance, energy, and consumer goods.

  • Examples of companies in the index: Apple, Microsoft, Amazon, Coca-Cola, JPMorgan Chase, and Google (Alphabet).

  • It’s considered a benchmark for the overall health and performance of the U.S. stock market and economy.

 Key Features

  • Diversification: It includes companies from 11 different sectors, which helps reduce risk.

  • Market-weighted: Bigger companies (like Apple) have more influence on the index than smaller ones.

  • Historical performance: Over the long term, the S&P 500 has averaged about 8–10% annual returns, including dividends.

In Investing

  • Passive investors often invest in S&P 500 index funds because it offers broad exposure to the market with lower fees.

  • It’s a great starting point for long-term investors who want to grow their money steadily over time.

The S&P 500 is a snapshot of the U.S. economy through the lens of its 500 biggest companies. It's one of the most important tools in investing.

  • Add a short summary or a list of helpful resources here.