When a news report says stocks rose 1% today, the number behind that sentence is usually the S&P 500, the benchmark that funds such as SPY are built to copy. This guide covers the tests a company must pass to get in, how the index turns company values into weights, what dominated it on September 30, 2026, and what it has returned with and without dividends. For the wider basics, start at the stocks hub; for how it differs from the Dow and the Nasdaq-100, see Dow Jones vs S&P 500 vs Nasdaq.
What is the S&P 500?
The S&P 500 is an index of 500 large US companies, weighted by the market value of their tradable shares, that measures how large-company stocks perform. It is run by S&P Dow Jones Indices, which also maintains the Dow Jones Industrial Average. S&P launched it on March 4, 1957, and has calculated values back to January 3, 1928, so any chart starting before 1957 shows a reconstructed history from a time when the series, then the S&P Composite Index, held fewer than 500 stocks.
On September 30, 2026, the S&P fact sheet listed 503 constituents with a combined market value of $68.45 trillion, about 80% of the value available in US stocks. The count is 503 rather than 500 because a few companies, Alphabet among them, have two listed share classes, and each class is a separate line in the index.
The figure quoted on the news, 7,651.54 at the September 30 close, is an index level, not a price. It equals the members' combined float-adjusted value divided by a scaling number S&P calls the divisor, so it only means something against its own past: a 1% rise in the level means the members together gained about 1% in value. The headline level tracks prices only; a separate total return version reinvests dividends.
How does a company get into the S&P 500?
A company must pass S&P's published eligibility tests and then be picked by the Index Committee, which chooses among eligible candidates to keep the index representative. The tests below come from the S&P U.S. Indices Methodology dated July 2026.
| Test | What S&P requires for an addition | What it keeps out |
|---|---|---|
| Domicile and filings | A US-domiciled company that files 10-K, 10-Q and 8-K reports as a domestic issuer | Foreign companies and American depositary receipts |
| Listing | NYSE, NYSE Arca, NYSE American, one of three Nasdaq tiers, one of four Cboe equity exchanges, or the Texas Stock Exchange | Over-the-counter stocks |
| Structure | Common stock of a corporation, including REITs | ETFs, closed-end funds, partnerships, business development companies, SPACs and tracking stocks |
| Size | Total company value at or above the S&P 500 cutoff, with the listed share line's float-adjusted value at least half of it | Mid-size and small companies |
| Float | An investable weight factor of at least 0.10, meaning at least 10% of the shares are available to public investors | Companies almost wholly owned by insiders, a parent or a government |
| Liquidity | Trading over the past year worth at least 0.75 times the float-adjusted value, and at least 250,000 shares traded in each of the last six months | Thinly traded stocks |
| Profitability | Positive GAAP net income from continuing operations in the latest quarter and over the latest four quarters combined | Loss-making companies |
| Seasoning | At least 12 months of trading after an IPO or a SPAC merger | New listings |
The size cutoffs are set in dollars and checked every quarter. They currently require at least $22.7 billion for the S&P 500, $8.0 billion to $22.7 billion for the S&P MidCap 400 and $1.2 billion to $8.0 billion for the S&P SmallCap 600 (S&P Dow Jones Indices, as of Nov 2, 2026). GAAP net income is the bottom-line profit a company reports under US accounting rules, and how to read an earnings report shows where to find it in a quarterly filing.
Passing every test makes a company eligible, not a member. An Index Committee of S&P Dow Jones Indices staff meets monthly, chooses additions at its discretion and weighs sector balance, comparing each sector's weight in the index with its weight among similar-sized US companies. The index holds a fixed 500 companies, so each addition needs a departure, and the committee's discussions stay confidential because news of a change can move prices.
The rules faced a real test in 2026. S&P asked market participants whether to cut the IPO waiting period from 12 months to six and to waive the float and profitability tests for mega-cap companies, proposed as the 100 largest in its total-market index. On June 4, 2026, it announced no changes for the S&P 500, MidCap 400 or SmallCap 600, concluding that exceptions should not be granted solely because a company is large. A giant new listing still waits a year, and a big company losing money stays out until its earnings turn positive.
Worked example: Checking a hypothetical candidate against the entry tests
A US company has been listed on Nasdaq for three years. It has 1 billion shares at $30, so its total market value is $30 billion, and its founders and a former parent company hold 55% of the shares.
- Size: $30 billion clears the $22.7 billion cutoff in force since July 1, 2025.
- Float: 45% of the shares are public, an investable weight factor of 0.45, so the float-adjusted value is $30 billion × 0.45 = $13.5 billion, above half the cutoff, $11.35 billion.
- Liquidity: $12.0 billion of stock traded over the past year, and $12.0 billion ÷ $13.5 billion = 0.89, above the 0.75 minimum. The quietest of the last six months saw 4 million shares trade, far more than 250,000.
- Profitability: GAAP net income over the last four quarters was −$420 million, $90 million, $110 million and $160 million. The latest quarter is positive, but the four-quarter total is −$60 million, so the company fails.
If the next quarter earns $180 million, the loss quarter drops out of the window and the total becomes $90 + $110 + $160 + $180 = $540 million. The company would then be eligible, and the committee could add it when a slot opens and the sector mix fits.
How is the S&P 500 weighted?
Each company's weight is its float-adjusted market value, share price times the shares available to the public, divided by the combined float-adjusted value of all members.
Weight = price × shares outstanding × investable weight factor ÷ total float-adjusted value of the index
The investable weight factor removes shares held by strategic owners such as founders, governments and parent companies, so a business with a controlling holder gets less weight than its total value suggests; market cap explained shows how the float and multiple share classes are handled. Weights drift with every price move, and S&P refreshes share counts and float factors at the quarterly rebalance, after the close on the third Friday of March, June, September and December.
When S&P adds or removes a company, or a member's share count changes, it adjusts the divisor so the index level does not jump; only price changes move the level. A stock split needs no adjustment, because it leaves a company's value unchanged, one of several ways this index differs from the price-weighted Dow.
Worked example: Where $10,000 in an S&P 500 fund went on September 30, 2026
The weights are SPY's holdings on that date as published by State Street. The fund owns every member of the index, and its figures match the index fact sheet, which put the largest member at 8.4% and the top ten at 39.1%.
| Holding | Weight | Dollars out of $10,000 |
|---|---|---|
| Nvidia | 8.38% | $838 |
| Apple | 7.37% | $737 |
| Microsoft | 5.77% | $577 |
| Amazon | 3.71% | $371 |
| Alphabet, Class A and Class C | 3.06% + 2.46% = 5.52% | $552 |
| Broadcom | 2.53% | $253 |
| Meta Platforms | 2.42% | $242 |
| Micron Technology | 1.82% | $182 |
| Tesla | 1.52% | $152 |
| Top ten lines combined | 39.04% | $3,904 |
| The other 493 lines | 60.96% | $6,096 |
- The smallest member, worth about $5.7 billion, was roughly 0.008% of the $68.45 trillion total, or about 84 cents of the $10,000.
- An equal-weight portfolio would put 1 ÷ 500 = 0.2%, or $20, into each company. Nvidia's 8.4% index weight was 42 times that.
S&P publishes that alternative as the S&P 500 Equal Weight Index, which resets every company to the same weight each quarter, along with capped versions. The headline index has no cap, so a company's weight keeps rising for as long as its shares outrun the market, whereas the Nasdaq-100 trims its largest members when they pass set limits.
How often does the S&P 500 change?
Membership changes are made as needed rather than on a fixed schedule, while share counts and float factors are refreshed at each quarterly rebalance.
There is no annual rebuild. A company leaves when it is acquired or delisted, or when the committee decides it substantially breaks the entry criteria, and S&P normally announces each change at least three business days ahead. The entry tests apply to additions, not to continued membership, so a member that shrinks below the cutoff or reports a loss is not removed for that alone, which keeps turnover down. It explains how the smallest member on September 30, 2026 could be worth about $5.7 billion, roughly a quarter of what a newcomer needed.
The September 2026 rebalance shows the usual pattern. After the close on September 4, 2026, S&P announced that Bloom Energy, Illumina and Everpure would join before the open on Monday, September 21, replacing Molson Coors Beverage, The Trade Desk and Builders FirstSource. Illumina and Everpure moved up from the S&P MidCap 400, leaving it the same day, while Molson Coors and Builders FirstSource moved down to the S&P SmallCap 600. Such moves between the three indexes that make up the S&P Composite 1500, which S&P calls migrations, need to meet only the new index's size range, not the profitability or liquidity tests.
Each change forces trades: funds that track the index have to buy every newcomer and sell every departing member at the switch-over, which is why S&P announces changes publicly and sets a firm effective date.
Which sectors and companies dominate the S&P 500?
Information technology dominates: on September 30, 2026 it made up 39.71% of the index, and the ten largest holdings together made up 39.1%.
| GICS sector | Weight on September 30, 2026 | Members among the top ten holdings |
|---|---|---|
| Information technology | 39.71% | Nvidia, Apple, Microsoft, Broadcom, Micron |
| Financials | 11.40% | None |
| Communication services | 9.95% | Alphabet (two share classes), Meta |
| Health care | 9.26% | None |
| Consumer discretionary | 8.60% | Amazon, Tesla |
| Industrials | 8.05% | None |
| Consumer staples | 4.37% | None |
| Energy | 3.40% | None |
| Utilities | 1.88% | None |
| Real estate | 1.70% | None |
| Materials | 1.70% | None |
Technology and communication services together came to about half the index, 49.66%. At the other end, energy, utilities, real estate and materials added up to 8.68%, barely more than Nvidia's 8.38% on its own. Sector labels can understate how much rides on technology: under GICS, the sector system each member is sorted into, Amazon and Tesla count as consumer discretionary and Alphabet and Meta as communication services.
Company sizes are lopsided too. The fact sheet put the average member's total value at $136.1 billion but the median at $43.5 billion, and the largest member, at $5.53 trillion, was nearly 1,000 times the size of the smallest. Since sector weights are company weights added up, a big move in a handful of technology names reshuffles the whole table.
What has the S&P 500 returned with and without dividends?
Over the 10 years to September 30, 2026, the index gained 13.44% a year from price changes alone and 15.33% a year with dividends reinvested.
| Period to September 30, 2026 | Price return, per year | Total return, per year | Added by dividends |
|---|---|---|---|
| 1 year | 14.40% | 15.74% | 1.34 points |
| 3 years | 21.29% | 22.89% | 1.60 points |
| 5 years | 12.18% | 13.79% | 1.61 points |
| 10 years | 13.44% | 15.33% | 1.89 points |
The price returns come from the S&P fact sheet and the total returns from the benchmark row State Street publishes beside SPY's own results. The gap looks small in any one year, but compounding turns it into real money.
Worked example: $10,000 over the 10 years to September 30, 2026
- Price only: $10,000 × 1.1344 ^ 10 = about $35,291
- Dividends reinvested: $10,000 × 1.1533 ^ 10 = about $41,632
- Difference: about $6,341, or 18% more money, from dividends and the growth they earned
- Through SPY itself, whose net asset value returned 15.18% a year: about $41,093, or $539 less than the index, the cost of owning it through a real fund
Over longer periods, dividends carry even more weight. In S&P Dow Jones Indices' back-tested figures, $1 in the index at the start of 1930 grew to $278 by the end of February 2025 from price gains alone, but to $9,584 with dividends reinvested, roughly 6.1% a year against 10.1%. S&P calculates that dividends supplied about 31% of total return from 1926 to February 2025, more than half in the 1940s and 1970s and as little as 14% in the 1990s; dividend investing basics explains yield and payout.
Annual data compiled by Aswath Damodaran at NYU Stern point the same way: from 1928 through 2025, the index with dividends compounded at about 10.0% a year, turning $100 into about $1.16 million. Both series are back-tested before 1957 and ignore fund fees and taxes.
How do funds like SPY track the S&P 500?
You cannot buy an index, so investors use funds that hold every member at its index weight, such as SPY, VOO and IVV, or index mutual funds. SPY, launched in January 1993, was the first ETF listed in the United States and charges an expense ratio of 0.0945%, while VOO charges 0.03% and IVV 0.03%. SPY vs VOO vs IVV compares their structures, index funds explained covers indexing itself, and what is an ETF explains how fund shares are created.
The latest price for one SPY share is $755.71 (Nov 2, 2026), and the SPY page charts its history; brokers that offer fractional shares sell slices for a few dollars. The table below shows SPY's price returns over one, three, five and ten years, its deepest fall from a peak and how much its price swung over the past year.
| Asset | Last close | 1 year | 3 years (per year) | 5 years (per year) | 10 years (per year) | Worst drop from a high | Volatility (1 year) |
|---|---|---|---|---|---|---|---|
| SPDR S&P 500 ETF | $755.72 | +11.2% | +22.1% | +10.5% | +13.5% | -56.5% (Mar 9, 2009) | 12.8% |
Treat the return columns as a floor: they leave out SPY's quarterly dividends, which added 1.3 to 1.9 percentage points a year in the periods in the returns table above. Read the worst-drop column first, because it shows the loss an owner had to sit through. The DCA calculator shows how buying a fixed amount every month would have worked, and lump sum vs dollar-cost averaging weighs investing a windfall at once or in stages.
What does the S&P 500 leave out?
It leaves out mid-size and small companies, foreign companies, recent IPOs and loss-makers, so it covers about 80% of US stock market value rather than all of it. Smaller companies sit in the S&P MidCap 400 and SmallCap 600, and the broader S&P Total Market Index has no size or profit test at all.
The profitability rule has a visible side effect: a large company that is losing money can be absent even when it is worth more than most members. The index also covers one country; many members earn revenue abroad, but all are US companies priced in dollars, and international stocks for US investors covers the rest of the world. It says nothing about bonds or cash, so it measures one part of a portfolio, not the whole.
What are the risks of investing in the S&P 500?
The main risks are deep and lasting declines, heavy concentration in a few technology giants, the valuation you buy in at, and the absence of any promised return.
- Deep declines. Counting dividends, the index lost 43.84% in 1931, 36.55% in 2008 and 18.04% in 2022, and it fell three years running from 2000 to 2002, about 37% in total, according to the NYU Stern data. Even from 2016 to 2025, when the price index rose in eight of ten years, it fell 6.24% in 2018 and 19.44% in 2022. Bear markets and corrections covers how long recoveries have taken.
- Concentration. On September 30, 2026, Nvidia, Apple and Microsoft alone were 21.52% of the index. Pairing an S&P 500 fund with a technology or Nasdaq-100 fund doubles up on the same names.
- Valuation. S&P's fact sheet put the index at 25.44 times trailing earnings as of June 30, 2026 and 19.25 times projected earnings as of September 30, with a dividend yield of 1.11%. These multiples change daily and say nothing about next year's return, but they show what investors were paying for each dollar of profit; the P/E ratio explained shows how to read them.
- No promised return. An index fund follows losses as faithfully as gains, and SIPC protection of $500,000 per customer, including up to $250,000 in cash applies only if a brokerage fails, not if prices fall.
- Time horizon. Money needed within a few years may have to be sold during a decline, which is why short-deadline savings are often kept in cash or Treasury bills, compared in the safe investments guide.
- Rule changes. The committee has discretion and the methodology can change, so the index you own in ten years will follow whatever rules apply then.