Modern finance · 1950s–1990s
1957
The S&P 500
Standard & Poor's launches an index of 500 companies weighted by market value.
Launched on 4 March 1957, the S&P 500 weights each company by its market capitalization, so bigger companies count for more. It became the most followed measure of the US stock market.
💡 Why it made sense then
Computers made it possible to calculate a broad index quickly, and weighting by value better reflects what investors actually own.
Ideas it gave us
- 🧺 Market index
A market index is a number that tracks the combined price of a set group of stocks, such as the S&P 500 (500 large US companies), to show how that part of the market is doing.
- 📈 Market capitalization
Market capitalization is the total value of a company's shares: the share price multiplied by the number of shares outstanding.
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