What is S&P 500?The S&P 500 referred to as Standard & Poor's 500 Index, is a market-capitalization-weighted index of around 500 (recently accurately 503) leading publicly traded US companies to track the US market through these company's stock performance, and provide investors a quick financial snapshot about the market conditions and trends, expressed numerically. Simply stated it acts as a measure of how well the US stock market is performing overall but the S&P 500 is watched by investors and stock analysts from all over the world. |
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S&P 500 is not an exact list of the best-performing 500 US companies by market cap because to be eligible for the index, companies must meet a trove of criteria. He you can find some of the main ones. » Market Capitalization should be equal or higher than $8.2 billion. » US-based company structured as a corporation that offers common stock. » Eligibility on US Stock Exchange as NYSE and NASDAQ » Positive reported earnings in the Most Recent Quarter and on a Trailing Twelve Months basis » Positive as-reported earnings over the most recent quarter, in addition to over the four most recent quarters added together |
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Owing to this criteria only the country's largest, strongest and most sound corporations are listed in the S&P 500 therefore it is considered as one of the best gauges of US stock market overall. The list of S&P 500 is reviewed in accordance with the criteria above and updated quarterly. Though you can't directly invest in the S&P 500 Index, you can buy stocks of the individual companies included in the index, or invest in so called index funds or ETFs that replicate the index.
Nowadays investors can trade the S&P 500 index using CFDs (contracts for difference) that will allow anyone to open long or short position without being involved in conventional trading through a stock exchange. |
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The S&P 500 is traced by all types of investors because it serves as a reliable volatility gauge with its considerable price movements therefore S&P 500 quotation is very important for traders regardless of their time horizon. By the instant market-replication nature of the index, S&P 500 price can provide Day Traders with a high-precision tool to help them identify even trifle changes in global market trends that can imply exposure to the price of a stock they already bought or want to buy. | |||
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Beside to the undoubted benefits there are limitations of the S&P 500, and any other market capitalization weighted index emerge when stocks listed in the index become overvalued, consequently their price climbs higher than their fundamentals would pinpoint the significant rise. Accordingly if a stock with a massive weight in the index is overvalued, it in face inflates the inclusive value of the S&P 500. | |||
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