Glossary · Stocks and markets
S&P 500
The S&P 500 is an index of about 500 of the largest US companies, weighted by market value. It is the most watched gauge of the US stock market.
Also called: S&P, Standard & Poor’s 500, SPX, S&P 500 index
Average of daily closes, Oct 2026: +14.7% in 12 months, +15.9% with dividends.
Before inflation; 7.1% after. Price alone: 4.9%.
113 of 154 years since 1872, dividends included.
In plain words
If you want one number for “how are American companies doing on the stock market”, the S&P 500 is it. It follows about 500 of the biggest US companies, from tech giants to banks, oil producers and supermarket chains.
Bigger companies count more: each one is weighted by its market value, counting only the shares that trade freely. So the largest firms move the index far more than the smallest ones on the list.
A committee at S&P Dow Jones Indices picks the members: large, profitable, US-based companies whose shares trade often. When one shrinks, merges or fails, it is replaced. The index started in its current form on March 4, 1957; with the older indexes it continues, the record goes back to 1871.
Example
Why the biggest companies matter most
Suppose the 500 companies are worth $50 trillion together.
- A giant worth $3 trillion makes up 6% of the index; a company worth $15 billion makes up 0.03%.
- If the giant rises 10% and nothing else moves, the index rises 0.6%.
- If the small company doubles, the index rises only 0.03%.
- When one company is swapped for another, S&P adjusts a number called the divisor, so the swap itself does not move the index.
The S&P 500 is “500 companies”, but its ups and downs come mostly from its largest members.
One level deeper
The index level is the total free-float market value of its members divided by a divisor, which S&P adjusts for share sales, buybacks and changes of members. A stock split changes nothing: the price halves, the number of shares doubles, the value stays the same.
The price index leaves out dividends. With them reinvested, the S&P 500 and its predecessors returned 9.4% a year since 1871, against 4.9% from prices alone. After inflation the return was 7.1% a year.
$10,000 put into the index in Oct 1996 grew to about $186,117 by Oct 2026 with dividends reinvested. The average hides wild years: the best calendar year since 1872 was 1933 (+54.4%), the worst 1931 (−41.8%).
Every calendar year of the S&P 500 since 1872
Each bar is one year’s total return, dividends included. Most bars are above zero: 113 of 154 years gained, and the average year returned 10.9%. But 8 years lost 20% or more.
The numbers behind the chart
| Date | Total return in the year |
|---|---|
| 1872 | 13.1% |
| 1880 | 24.1% |
| 1890 | −9.8% |
| 1900 | 19.0% |
| 1910 | −7.7% |
| 1920 | −18.5% |
| 1930 | −24.0% |
| 1940 | −9.7% |
| 1950 | 27.9% |
| 1960 | −0.4% |
| 1970 | 2.7% |
| 1980 | 30.2% |
| 1990 | −2.4% |
| 2000 | −5.8% |
| 2010 | 14.0% |
| 2020 | 18.5% |
| 2021 | 28.3% |
| 2022 | −15.0% |
| 2023 | 21.7% |
| 2024 | 30.0% |
| 2025 | 15.4% |
Why it matters
It is the benchmark: most US stock fund managers are judged against it, and over long periods most fail to beat it after fees.
Trillions of dollars sit in funds that simply copy it; the cheapest of them charge 0.03% a year or less.
It is a long, consistent record of US stock returns, which is why this site uses it to answer questions like the average stock market return.
A common mistake
Myth: The S&P 500 is simply the 500 biggest US companies.
In fact: Close, but not exactly. A committee chooses the members by rules on size, profits, trading and US domicile, so some large companies are missing (for example ones with few freely traded shares or without profits yet), and the list changes several times a year.
Questions people ask
What is the average return of the S&P 500?
Since 1871, about 9.4% a year with dividends reinvested, before inflation, and 7.1% after. The simple average of single calendar years is higher, 10.9%, because losses hurt compounding more than gains help.
How many companies are in the S&P 500?
500 companies, but slightly more than 500 stocks: a few companies have two classes of shares in the index (Alphabet, for example).
Can I invest in the S&P 500?
Yes, through an index fund or an ETF that holds all its stocks. You get the index’s return minus a small yearly fee.
Read more on BigCapital
About the numbers
- The numbers on this page are recalculated from the data every night; the sources are listed at the end of the page.
- S&P Composite price and total return since 1871, and US consumer prices: Robert J. Shiller, Online Data (shillerdata.com); total return with dividends reinvested monthly, calculated by BigCapital.
- This page explains a term. It is not investment advice.