The Standard & Poor’s (S&P) 500 consists of 500 companies that issued a total of 503 stocks as of May 31, 2023 (some of the companies, such as Alphabet, have issued multiple classes of shares). S&P 500 companies represent the top companies within their industries and are a gauge of U.S. economic activity. An S&P 500 company must meet specific requirements to be included as a constituent within the index.
The top 10 largest holdings are listed on the official S&P Global website. However, S&P doesn’t currently provide the total list of the index’s holdings, at least not for free. Subscribers to S&P’s research unit, Capital IQ Pro, can get access to the entire list.
Key Takeaways
- The S&P 500 includes some of the top U.S.-listed companies that are leaders within their industries and represent a bellwether for the U.S. economy.
- Companies must meet certain criteria, which are determined by the publishers of the index, before being added to the S&P.
- The S&P 500 index is market-capitalization-weighted; it gives a higher percentage allocation to companies with the largest market caps.
- To join the S&P 500, a stock must meet certain criteria, including a total market cap of at least $12.7 billion and a float-adjusted liquidity ratio (“FALR”) greater than or equal to 0.75.
- Companies may be removed from the S&P 500 if they deviate substantially from these standards.
S&P 500 Inclusion Criteria
The S&P 500 was created in 1957 and is one of the most widely quoted stock market indexes. S&P 500 stocks represent the largest publicly traded companies in the U.S. The S&P 500 focuses on the U.S. market’s large-cap sector.
An S&P 500 company must meet a broad set of criteria to be added to the index, including the following:
- A total market cap of at least $12.7 billion
- Must be a U.S. company
- A float-adjusted liquidity ratio (“FALR”) greater than or equal to 0.75
- A positive sum of the most recent four consecutive quarters of trailing earnings
- Positive earnings for its most recent quarter
- Must meet certain liquidity requirements
Note
Companies may be removed from the S&P 500 if they deviate substantially from the standards for inclusion.
S&P 500 Calculation
The S&P 500 is a free-float market capitalization-weighted index. Market capitalization represents the total-dollar market value of a company’s outstanding equity shares. Market cap is calculated by multiplying the total number of outstanding shares of stock by the company’s current stock price. For example, a company with 20 million shares outstanding whose stock is selling for $100 per share would have a market cap of $2 billion.
As a result, the more valuable an individual company’s stock becomes, the more it contributes to the S&P 500’s overall return. It is not uncommon for three-quarters of the index’s return to be linked to only 50 to 75 stocks.
Therefore, the addition or subtraction of smaller companies from the index won’t have a noticeable impact on the overall return of the index; however, the removal or addition of even one of the largest stocks can have a major impact.
S&P 500 Sector Breakdown
Below are the top sectors and their weightings within the S&P 500 index, as represented by the SPDR S&P 500 ETF Trust (SPY), as of June 27.
| S&P 500 Sector Weighting | |
|---|---|
| Sector | Index Weighting |
| Information Technology | 28.2% |
| Healthcare | 13.5% |
| Financials | 12.3% |
| Consumer Discretionary | 10.7% |
| Industrials | 8.6% |
| Communication Services | 8.4% |
| Consumer Staples | 6.8% |
| Energy | 4.1% |
| Utilities | 2.6% |
| Materials | 2.5% |
| Real Estate | 2.4% |
Being aware of the S&P’s sector weighting is important because sectors with a smaller weighting may not have a material impact on the value of the overall index—even if they’re outperforming or underperforming the market.
For example, if oil prices are rising, leading to increased profits for the energy sector, those stocks represent only about 4% of the S&P 500. As a result, oil stocks may not lead to a higher S&P if, for example, the more heavily weighted information technology sector is underperforming.
S&P 500 components are weighted by free-float market capitalization, which means that larger companies can affect the value of the index to a greater degree.
Top 25 Components by Market Cap
Because the exact weightings of the top 25 components aren’t available from S&P directly, the weightings below are from the SPDR S&P 500 Trust ETF (SPY). SPY is the oldest exchange-traded fund (ETF) that tracks the S&P 500. It held $411.8 billion in assets under management (AUM) as of June 27, and is highly traded.
As a result, the SPY’s portfolio weightings provide a good proxy for investing in the underlying S&P 500 index, although the two may not be exactly the same. As of June 27, the following were the 25 largest S&P 500 index constituents by weight:
- Apple (AAPL): 7.61%
- Microsoft (MSFT): 6.80%
- Amazon (AMZN): 3.15%
- NVIDIA (NVDA): 2.83%
- Alphabet Class A (GOOGL): 1.92%
- Tesla (TSLA): 1.84%
- Meta Platforms (META), formerly Facebook, Class A: 1.74%
- Alphabet Class C (GOOG): 1.66%
- Berkshire Hathaway (BRK.B): 1.64%
- UnitedHealth Group (UNH): 1.23%
- Johnson & Johnson (JNJ): 1.16%
- ExxonMobil (XOM): 1.16%
- JPMorgan Chase (JPM): 1.11%
- Visa Class A (V): 1.01%
- Eli Lilly (LLY): 1.00%
- Broadcom (AVGO): 0.97%
- Procter & Gamble (PG): 0.97%
- Mastercard Class A (MA): 0.87%
- Home Depot (HD): 0.87%
- Merck (MRK): 0.79%
- Chevron (CVX): 0.73%
- PepsiCo (PEP): 0.70%
- Coca-Cola (KO): 0.65%
- Costco (COST): 0.64%
- AbbVie (ABBV): 0.64%
How Many Companies Are in the S&P 500?
Although there are generally 500 companies within the index, that number has grown. As of May 31, 2023, there were actually 503 stocks that make up the S&P 500. That’s because some companies have multiple classes of equity shares, such as Alphabet.
What Are the Top 10 Holdings in the S&P 500?
As of June 27, 2023, the top 10 holdings and their weighting in the index were:
- Apple (AAPL): 7.61%
- Microsoft (MSFT): 6.80%
- Amazon (AMZN): 3.15%
- NVIDIA (NVDA): 2.83%
- Alphabet Class A (GOOGL): 1.92%
- Tesla (TSLA): 1.84%
- Meta Platforms (META), formerly Facebook, Class A: 1.74%
- Alphabet Class C (GOOG): 1.66%
- Berkshire Hathaway (BRK.B): 1.64%
- UnitedHealth Group (UNH): 1.23%
How Are Companies Selected for the S&P 500?
A company must meet certain requirements for inclusion in the S&P 500, which include:
- A market cap of at least $12.7 billion
- Must be a U.S. company
- A float-adjusted liquidity ratio (“FALR”) greater than or equal to 0.75
- Positive earnings over the most recent four consecutive quarters summed together
- A profitable earnings report for the company’s most recent quarter
- Liquidity requirements
How Can You Buy the S&P 500?
Because the S&P 500 is an index, it can’t be purchased directly by investors; however, shares of ETFs that mirror or track the index can be bought, such as the State Street Global Advisors’ SPDR S&P 500 Trust ETF (SPY).
The Bottom Line
The top 25 companies in the S&P 500 are some of the most well-known companies in the world, with a large portion of the top 10 being tech companies, such as Apple, Microsoft, and Google. To invest in the companies in the index, investors can purchase the individual stocks of the companies or invest in a fund that tracks the overall S&P 500.
The comments, opinions, and analyses expressed on Investopedia are for informational purposes online. Read our warranty and liability disclaimer for more info.
As of the date this article was written, the author owns shares of SPY.
Source: https://www.investopedia.com/the-top-25-stocks-in-the-s-and-p-500-7554507?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral&yptr=yahoo