The S&P 500

The S&P 500
The Standard & Poor's 500 Stock Index is a larger and more diverse index
than the DJIA. Made up of 500 of the most widely traded stocks in the U.S.,
it represents about 80% of the total value of U.S. stock markets. In general,
the S&P 500 index gives a good indication of movement in the U.S. marketplace
as a whole.

Because the S&P 500 index is market weighted (also referred to as
capitalization weighted), every stock in the index is represented in proportion
to its total market capitalization. In other words, if the total market value of all
500 companies in the S&P 500 drops by 10%, the value of the index also drops
by 10%.

A 10% movement in all stocks in the DJIA, by contrast, would not necessarily
cause a 10% change in the index. Many people consider the market weighting
used in the S&P 500 to be a better measure of the market's movement because
two portfolios can be more easily compared when changes are measured in
percentages rather than dollar amounts.

The S&P 500 index includes companies in a variety of sectors, including energy,
industrials, information technology, healthcare, financials and consumer staples.