It can be daunting to sit down and try to learn even just the basics about the stock market. Rather than trying to absorb everything in one go or jumping immediately into the minutiae of the market’s alphabet soup (NASDAQ, NYSE, DJIA, etc.), newcomers wanting to be better informed about the topic may start with a good look at the S&P 500.
An index that tracks the stock of roughly 500 of the largest public companies in the U.S., the S&P 500 is a leading indicator of the market’s overall performance. For further context, review SoFi’s guide on how stock exchanges work in general.
Key Points
• The S&P 500 was introduced in 1957, evolving from earlier indexes and initially representing over 90% of the total U.S. market value.
• Key milestones include the 2008 market crash, where the S&P 500 closed at 903.25, down 38.49%, and a 46.59% surge in 1933.
• The S&P 500 serves as a leading indicator of the U.S. economy’s financial health, reflecting the performance of 500 large-cap companies across various industries.
• Some S&P 500 companies have an international presence, with headquarters or incorporation in other countries, adding a global dimension to the index.
• The S&P 500 is used in investment strategies, allowing investors to gauge market trends and diversify portfolios through mutual funds or ETFs.
Who is Standard & Poor’s?
Standard & Poor’s is a financial services company specializing in conducting research and analysis that helps investors recognize opportunities and make better, more informed decisions.
The company’s roots date back to 1860 with the publication of a book of financial information on the U.S. railroad industry, which is only worth mentioning and being aware of in the 21st century as an indication of how steeped the company is in its mission to help provide transparency into the world of investing.
A History of the S&P 500: 1957 – Now
The S&P 500 was first introduced in 1957, the result of ongoing and gradual expansions to S&P’s previous, comparatively more limited stock indexes—like 1926’s roll-out of a daily round-up of 90 stocks.
Its emergence in 1957, according to S&P’s official history, was made possible by “an electronic calculation method developed by Boston-based Melpar, Inc., which allowed S&P to perform index calculations much more efficiently than before.” And while S&P reportedly could have tracked every stock on the New York Stock Exchange, it was decided to instead limit its scope to stocks that account for over 90% of total US market value. When it began, the S&P 500 consisted of 425 industrial companies, 25 railroad companies, and 50 utility companies.
A big reason why the S&P 500 is today widely considered by many investors to be perhaps the single best overall indicator of how large US stocks are performing is because of, as the name suggests, how comprehensive this index is.
The S&P 500 comprises 500 large-cap stocks (meaning a company valued at being worth more than $10 billion) representing the leading industries of the US economy, including everything from healthcare and information technology to utilities and many more. The S&P 500 tracks both the liquidity and also the risk associated with those companies.
Altogether, the S&P 500 gives an overview of how larger companies are performing, and as a result how many investor portfolios are performing as well. Through mutual funds or exchange-traded funds, it’s possible to participate as an investor in these large companies. SoFi’s financial planners can advise interested investors on what might make sense for your situation.
While on paper the S&P 500 is by a great measure more comprehensive than the Dow Jones Industrial Average (which measures the stock performance of only 30 large companies listed on stock exchanges), it should also be noted that a handful of the S&P 500 either are incorporated in or have headquarters located in other countries, like manufacturer Trane Technologies (Ireland) or oil and gas company TechnipFMC (England).
In other words, while the S&P 500 can give a solid overview of how large American companies are performing, it’s also an international index. To learn more about index investing and building a portfolio bigger than what might be right in your backyard, this overview on index investing is worth a look.
S&P 500 Earnings History
A quick look at the S&P 500 price history’s biggest milestones only further bolsters its potential usefulness as a market indicator for investment decisions.
To start with the bummer news and get it out of the way first, consider some of the lowest performances tracked and posted by the S&P 500: The stock market crash of 2008, for example, saw the market close at 903.25, with a point loss of 565.10 and overall being down 38.49%. The stock market crash of 1931, part of the Great Depression, was even worse, with Standard & Poor’s clocking a closing level of 8.12, a point loss of 7.22 and the market being down 47.07%.
In contrast, and maybe not a surprise, when the United States pulled out of the Great Depression in 1933 stands among some of the biggest high points in this country’s earnings history: That year, the S&P clocked the market surge ahead by 46.59%, closing at 10.10 and a point increase of 3.21. More recently, March 13, 2020 saw the market close at a record closing level of 2,711.02, representing a 230.38 point change and a 9.29% jump.
As of early 2025, the S&P 500 has hovered around record highs. It peaked in February 2025, at nearly 6,145. But by early April, it had fallen under 5,000. However, as of the beginning of May 2025, it was back above 5,600.
Overall, if there’s anything that can make eyes gloss over more than alphabet soup it’s a wall of numbers. All these figures really mean is that the S&P 500 is regarded as one of the leading authorities in gauging how the U.S. is doing financially.
The Takeaway
The S&P 500 is perhaps the most widely used and cited market index, comprising 500 companies from various industries. It can be used as a barometer of the market’s overall health, and was initially rolled out in the late 1950s by Standard & Poor’s. As of 2025, it’s near all-time highs, too — though that doesn’t mean it can’t see a significant downturn soon.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
FAQ
What does “S&P” stand for?
“S&P,” as in the “S&P 500,” stands for Standard & Poor’s, which is a financial services company that conducts market research and analysis.
How old is the S&P 500?
The S&P 500 was first introduced in 1957, and was the eventual result of the expansion of other market indexes. When it initially rolled out, it contained 425 industrial companies, 25 railroad companies, and 50 utility companies.
What is the S&P 500’s all-time high?
The S&P 500 reached an all-time high in February 2025, peaking at nearly 6,145, as of May 1, 2025.
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