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Standard & Poor's 500 Index (or S&P 500) is market index considered by many as one of the best gauges of the U.S. equity market and U.S. economy as a whole.
The index includes 500 leading large-cap companies from leading sectors of the american economy covering 80% of all available market capitalization. To enter the index, company should meet the following membership eligibility criteria: market capitalization should be US$ 5.3 billion or more; company's shares should demonstrate adequate liquidity and be reasonably priced; most recent quarter's earnings as well as their sum for the last four quarters should be positive; public float should constitute at least 50% of the stock; company should have operationally justifiable financial leverage. Currently, one fifths of index constituents belong to information and technology sector. Among top-10 companies by index weight there are such giants as Apple, Microsoft and ExxonMobil.
S&P 500 unlike Dow Jones Industrial Average is not price-weighed but market cap weighted. Historically, it was the first market index calculated on the basis of this methodology. Under this approach, the index value at any given point in time represents the quotient of the total float adjusted market capitalization of the index components and its divisor, which is adjusted for all changes in the share capital of constituents. Only shares that are in free-float are considered in index calculation.
S&P 500 was launched on March 4, 1957 by S&P Dow Jones Indices. The base value of the index is 10 and the base date is 1941-1943. Looking at the recent historical performance of the index two distinct spikes hit the eye. The first one corresponds to the period of dot-com bubble during which S&P 500 reached the point of 1527.46 on March 24, 2000 that was not exceeded for seven years and then dropped to 776.76 in the next 2 years. The second all-time high of 1565.15 was achieved on October 9, 2007 after which the index fell as a result of subprime mortgage crisis and then continued to decline in early 2009 denoting the end phase of global financial crisis of 2008. Then index started to gradually recover and on March 14, 2013 it closed above the previous all-time high of 2007.

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