S&P 500 INDEX
Instrument- S&P 500 INDEX
Minimum spread- 0.2
Typical spread- 1.8
Minimum nominal trade size- 1000
Overnight interest (annual) sell- -0.60%
Overnight interest (annual) buy- -0.1.70%
Trading hours (GMT) – 24*5
S&P 500 Trading
The Standard and Poor’s 500, or simply the S&P 500, is a stock market index tracking the performance of 500 large companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices. As of December 31, 2020, more than $5.4 trillion was invested in assets tied to the performance of the index.
The S&P 500 index is a free-float weighted/capitalization-weighted index. As of September 30, 2021, the nine largest companies on the list of S&P 500 companies accounted for 28.1% of the market capitalization of the index and were, in order of weighting, Apple, Microsoft, Alphabet (including both class A & C shares), Amazon.com, Meta Platforms, Tesla, Nvidia, Berkshire Hathaway and JPMorgan Chase. The components that have increased their dividends in 25 consecutive years are known as the S&P 500 Dividend Aristocrats.
Understanding the S&P 500 INDEX
The index is a free-float capitalization-weighted index; that is, companies are weighted in the index in proportion to their market capitalizations. For purposes of determining the market capitalization of a company for weighting in the index, only the number of shares available for public trading (“public float”) is used; shares held by insiders or controlling shareholders that are not publicly traded are excluded from the calculation.
Like other indices managed by S&P Dow Jones Indices, but unlike indices such as the Russell 1000 Index which are strictly rule-based, the components of the S&P 500 index are selected by a committee. When considering the eligibility of a new addition, the committee assesses the company’s merit using eight primary criteria: market capitalization, liquidity, domicile, public float, Global Industry Classification Standard and representation of the industries in the economy of the United States, financial viability, length of time publicly traded, and stock exchange. Over the past few years, there has been a decline in the number of S&P 500 companies with classified boards.
Factors to keep in mind while trading S&P 500 INDEX
- Individual Share Price
The weight given to each company included in the S&P 500 influences how the individual share price moves the overall index. The index is a weighted collective of share prices; in general, rising share prices will increase the value of the index and falling share prices will reduce it. It is important to remember that with the S&P 500, company shares are weighted differently depending on their market cap.
- Trader Sentiment
Trader sentiment impacts the S&P 500 by influencing the values of the underlying shares. This trader attention causes the underlying share prices inside the S&P 500 to possibly change. Share prices can also climb following an announcement of quarterly earnings or projected growth due to an unexpected outcome.
Major buying or selling of shares of any given company can be enough to move the price as it grabs the attention of more traders. As the underlying assets begin to move, so too does the value of the index.
- Political Events
Political events have the potential to help or hurt business activity. A new policy may hold the potential to impact an industry’s ability to perform business, which could impact on the whole index, should its component companies be concentrated within the said industry.
Why trade in S&P 500 INDEX with CAPITAL STREET
- BROAD RANGE OF MARKETS- Access to the popular Forex markets, including major, minor and exotic pairs
- CSFX offers you our state-of-the-art platforms and a range of trading tools
- Trade using Margin- Get greater exposure to the marketplace with a small deposit and spread your capital using margin.
- Automate your trade facilities and direct access to the market
- Safety of funds