The S&P 500’s Top 25 Stocks – Detailed Answer
As of September 30, 2022, the S&P 500 comprises 500 companies that collectively issue 503 stocks due to the issuance of multiple classes of shares by some companies, such as Alphabet. On the official S&P Global website, a list of the top 10 holdings is available.
A S&P 500 company must fulfill certain criteria in order to be a constituent of the index.
The complete list of holdings is not, however, currently made available by S&P, at least not for free. The whole list is available to subscribers of Capital IQ, a research division of S&P.
S&P 500 companies are a barometer of American economic activity and represent the best businesses in their respective industries.
Criteria for S&P 500 Inclusion
One of the most frequently mentioned stock market indices is the S&P 500, which was established in 1957. The biggest American publicly listed corporations are represented by S&P 500 stocks. The S&P 500 concentrates on the large-cap section of the American market.
To be included in the index, a corporation must fulfill a lengthy list of requirements, including the following:
- A minimum $14.6 billion in entire market capitalization
- Must be a US-based business
- Must have at least 10% of its outstanding equity shares on the public float.
- The trailing earnings for the most recent four consecutive quarters, added up.
- Favorable financial results during the most recent quarter
- Must comply with certain liquidity criteria.
Calculating the S&P 500
The S&P 500 is a market capitalization-weighted, free-floating index.
The market capitalization (also known as market cap) is the sum of the dollar market values of the outstanding equity shares of a company. The market capitalization of a company is calculated by dividing the total number of outstanding shares of stock by the stock price at the time.
A corporation with 20 million outstanding shares of stock that is trading at $100 per share, for instance, would have a market cap of $2 billion.
As a result, the greater an individual company’s stock value increases, the more it adds to the overall return of the S&P 500. It is not unusual for only 50 to 75 stocks to account for three-quarters of an index’s return.
The removal or addition of even one of the largest stocks can have a significant impact. As a result, the inclusion or exclusion of smaller companies from the index will not significantly affect the index’s overall return.
How Can I Purchase S&P 500?
Since the S&P 500 is an index, it cannot be bought directly, but exchange traded funds (ETFs) that replicate or follow the index, like the SPDR S&P 500 Trust ETF from State Street Global Advisors, can be bought.
Some of the most well-known businesses in the world are among the top 25 S&P 500 companies, with many of the top 10 being tech giants like Apple, Microsoft, and Google. Investors can buy the individual stocks of the companies included in the index or put money into a fund that tracks the S&P 500 to invest in the companies included in the index.
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