What is the Standard & Poor's 500 (S&P 500)?

One of the most significant indices on the world’s trading arena, the Standard & Poor’s 500 is commonly used by investors to define the right market entry moments. Being composed of the largest corporations, it reflects the state of the global economy.

Is the S&P 500 a float-weighted index?

The S&P is a float-weighted index, meaning the market capitalizations of the companies in the index are adjusted by the number of shares available for public trading. Because of its depth and diversity, the S&P 500 is widely considered one of the best gauges of large U.S. stocks, and even the entire equities market.

Why is the S&P 500 important?

The S&P 500 index is the most important indicator of the economy and the US stock market. Those who prefer it to the Dow Jones do so because the S&P 500 is much more reflective of the market, highly diversified, and calculated based on capitalization, not just price.

What is the Vanguard 500 index fund?

The Vanguard 500 Index Fund seeks to track the price and yield performance of the S&P 500 Index by investing its total net assets in the stocks comprising the index and holding each component with approximately the same weight as the S&P index. In this way, the fund barely deviates from the S&P, which it is designed to mimic.