Understanding Indexes: The S&P 500


The S&P 500 is one of the most important market indexes available. It consists of the top 500 companies traded on Wall Street. Recently, the S&P 500 has shown quite a bit of correlation with the crypto markets.

Understanding Indexes: The S&P 500

Indexes are by far one of the most important tools in the world of trading. Rather than focusing on one individual asset at a time, indexes allow us to look at a basket of similar assets under the umbrella of one singular averaged chart. In this article series, we will be looking at the most important indexes used by traders, in both cryptocurrency and traditional markets.

What is the S&P 500

The S&P 500 is simply an index that describes the average performance of the top 500 publicly traded companies that are listed on the stock market. The S&P 500 is not dissimilar to the Dow Jones Industrial Average, which tracks the top 30 “Blue Chip” companies. The reason that the S&P 500 is so incredibly important within the world of trading is because the companies listed in the S&P 500 account for 80 percent of the total stock market value.

The companies that are included in the S&P 500 are the best performing companies that are based in the United States. Since the US economy is widely considered to be the bedrock for the current world economy, the S&P 500 is often described as the closest thing to a “riskless” investment. Even though each and every asset comes with some degree of risk, the chances of going negative are nearly unheard of when it comes to S&P 500 investors. Investing in the S&P 500 means investing in the 500 most successful publicly traded companies, in a straightforward and simplistic manor.

The Three Major Functions of the S&P 500

  • The S&P 500 shows the market capitalization-weighted index of the 500 largest publicly traded US companies.
  • The S&P 500 is commonly used as a broad-spectrum benchmark for stock portfolio performance in America, as well as other countries abroad.
  • The market cap of the S&P 500 is 70 to 80 percent of the total US stock capitalization.

History of the S&P 500

The S&P, or Standard and Poor 500 index was originally used since 1926. It was derived as a means of consolidating the overall price action of the most successful companies listed on the stock market. At the time of its creation, the S&P only encompassed the top nine stocks within the stock market. Since then, the S&P 500 has evolved to be one of the most valuable indexes on the market.

Top Sector of the S&P 500

Even though the individual stocks change intermittently, around 50 percent of the S&P 500 is typically driven by tech, healthcare and financial companies combined. By comparison, the bottom end of the S&P 500 consists of utilities, real estate and materials, which only make up around 10 percent of the index.

S&P 500 Selection Process

  • S&P 500 companies must have a minimum market cap of $6.1 billion.
  • S&P 500 companies must have a minimum trading volume of 250,000 shares per month, over the course of six months. The company will then be eligible for review by the S&P 500 Committee.
  • Any company that wishes to be listed on the S&P 500 must be publicly listed on a major exchange.

The S&P 500 and Crypto

Although the S&P 500 is not directly connected to the cryptocurrency market, there is a correlation between the two which seems to be growing each year. As an example, the S&P 500 and the total cryptocurrency market cap expressed very similar price fluctuations during the most recent bout of bearish price action.


Over time, we will likely see more correlation between cryptocurrencies and the stock market. As more large companies add cryptocurrencies to their balance sheets, the gap between the two markets will become smaller and smaller as time goes on.

Killer Whale Crypto


Stay Up To Date

Get weekly insights and updates from the Killer Whale Crew

We do not send spam or sell your info. Click here to read our Privacy Policy


Start Trading

Want to get started in automated crypto trading? Check out Killer Whale's hand picked strategies