Global stock markets uncovered: The S&P 500

Julie Brownlee, Fsp Invest, 24 Aug. 2015

Tags: s&p 500, what is the s&p 500, s&p 500 sectors, largest stock market index, biggest stock market index, stock markets,

If you want to look at the world’s largest stock market, you have to turn to the US.

Investors tend to use the performance of the US markets as a barometer for what’s going to happen in the rest of the world.

The largest stock market index is the S&P 500.

So what makes up the S&P 500? And what sort of stocks will you find there?

Read on to find out…

The ins and outs of the S&P 500

The S&P 500 is a stock market index of the world’s biggest stock market.

What happens on the S&P 500 tends to set the precedence for what’s going to happen in other markets around the world. This includes emerging markets and developed markets.

The S&P 500 represents 500 of the largest companies in the world. These stocks either have listings on the New York Stock Exchange or the NASDAQ.

The performance of the S&P 500 can be a good barometer of the state of the US economy.

What stocks are included in the S&P 500?

Cyclical stocks account for around 71% of the S&P 500. This means the index is sensitive to what’s happening in the wider economy.

This heavy weighting of cyclical stocks is high for a developed market.

Have a look at the chart below of the sectors making up the S&P 500…

Sectors of the S&P 500

The main cyclical sectors of the S&P 500 are financials and technology. These account for 35% of the index.

The largest defensive sector in the index is health care. This makes up nearly 15%.

The oil and gas sector used to be a significant sector in the S&P 500. But with the oil price rout over the past year, this sector now accounts for just over 7%. When oil prices were more buoyant, the sector made up around 10%.

So there you have it. The S&P 500.

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