S&P 500 Index in Singapore
What is the S&P 500?
The Standard & Poor's 500 Index, usually referred to as the S&P 500, is a market capitalization-weighted index of 500 publicly traded large-cap businesses listed on the New York Stock Exchange (NYSE).
Since it was first introduced in 1957, the S&P 500 index has grown to become one of the most popular and well-known stock market indexes globally. Due to the fact that the companies represented by the index are often well-established and financially secure, it is frequently used as a gauge for the state of the economy.
The companies that make up the S&P 500 are selected by an expert committee at Standard & Poor's, a division of S&P Global that provides financial services. Each company must meet several requirements in order to be considered for inclusion in the index, such as having a market capitalization of at least $8.2 billion, a sufficient float of shares accessible for trade, and a track record of stable financial performance.
As the S&P 500 represents a diversified cross-section of the stock market and includes companies from a range of areas, including technology, healthcare, finance, and energy, it is also used as a benchmark for the performance of the overall stock market. Since the index is generated using a market capitalization-weighted formula, larger companies have a stronger proportionate influence on the index's overall value.
Why is the S&P 500 so Popular?
The S&P 500 is made up of highly liquid companies, meaning that it is relatively easy to buy and sell shares in these companies. This makes the index accessible to a wide range of investors. In addition, the S&P 500 comprises 500 large publicly traded companies from a variety of industries, providing investors with diversification across sectors and helping to mitigate risk.
Investing in an S&P 500 index fund or ETF is also generally less expensive than investing in actively managed funds, as there are no management fees or research costs associated with tracking the index. This makes the S&P 500 an attractive option for cost-conscious investors.
Historical Performance of the S&P 500
The S&P 500 has historically delivered strong returns for investors. From its inception in 1957 through the end of 2021, the index has an average annual return of around 11.88%. However, the stock market is inherently volatile and the value of the S&P 500 can fluctuate significantly over shorter time periods. On average, the S&P500 significantly outperformed the average annual returns of hedge funds, which makes the S&P 500 the most popular index fund on the NYSE.
Derivatives of S&P 500
Derivatives of the S&P 500 are financial instruments that are derived from the value of the S&P 500 index. These derivatives can be used for a variety of purposes, such as hedging risk, speculating on market movements, or as a means of leverage.
Some popular of derivatives of the S&P 500 include the S&P 500 futures, which are contracts that obligate the buyer to purchase a specific amount of the S&P 500 index at a predetermined price on a future date. S&P 500 futures are traded on futures exchanges and are commonly used by investors and traders to hedge against market risk or speculate on the direction of the market.
There are also S&P 500 index funds and ETFs which aim to replicate the performance of the S&P 500 by investing in the same companies that the S&P 500 is comprised of.
Largest Components of S&P 500
The ten largest components of the S&P500 (as of 5 January 2023) are:
Apple (5.84% weightage)
Microsoft Corporation (5.58% weightage)
Amazon.com Inc. (2.38% weightage)
Berkshire Hathaway Inc. Class B (1.74% weightage)
Alphabet Inc. Class A (1.66% weightage)
UnitedHealth Group Incorporated (1.51% weightage)
Alphabet Inc. Class C (1.48% weightage)
Johnson & Johnson (1.46% weightage)
Exxon Mobil Corporation (1.37% weightage)
JP Morgan Chase & Co. (1.24% weightage)
The composition of the S&P 500 is periodically reviewed and updated, which means that the list of largest components of the S&P 500 may change over time. Additionally, the price movements of each individual stock can also lead to changes in the weightage of each stock, which means that it is possible for the list of largest components of the S&P 500 to change even without the interference of the committee at S&P Global.
Investing in the S&P500 via moomoo
If you are interested in investing in the S&P 500 to potentially turn a profit from the growth of the US economy, you will be able to do it via moomoo. To start, click on the ‘Markets’ tab and navigate to the US section. You will then be presented with a list of popular indexes in the United States, namely the Dow Jones, NASDAQ, and the S&P 500. You can then click on the S&P 500 option, which will provide you with more detailed information about the index.
You will be able to see its intraday price movements, as well as its historical price movements. You will also be able to obtain information such as its daily highs, daily lows, as well as its overall price movement within the day in percentage terms. By scrolling down, you will be able to view the list of companies that the index is comprised of. You will also be able to obtain an overview of their individual intraday performances as seen on the screenshot on the bottom left.
Following that, you can click on the ‘News’ tab to look at the relevant news updates relating to the US economy. These news reports generally contain information that will impact the price movements of the index. Hence, accessing these articles will help you to understand the short-term market outlook for the US economy, which can help you to make a more informed investment decision.
You will also be able to click on the ‘Comments’ section which will display a list of comments left by other moomoo users. These comments are related to the stock, which can provide you with more information about the general sentiment regarding the expected performance of the stock. At the top of the ‘Comments’, you will see a ‘Market Forecast’ vote which provides an approximation of whether the overall market sentiment is more bullish or bearish. Sign up and download moomoo stock trading app today to get the news and information about the S&P 500 index now!
