What are S&P 500 Companies
What are S&P 500 companies? Put simply, they are an index of shares from some of America’s most popular publicly traded companies. The S&P 500 was formerly known as the Standard and Poor Composite Stock Price Index- but it is now more widely referred to as the S&P 500. They are often used to track how these stocks perform in the economy.
When news channels talk about the health of the US economy, they are likely referring to the S&P 500 companies. Often these companies represent the success or failure of other firms within their industry.
What Companies make up the S&P 500?
The S&P 500 Index is an indicator of some of the most powerful and influential corporations in America. The index is determined by calculating the total market capitalization for every share that is issued by each corporation listed. Here are some examples from this prestigious list.
- Visa Inc
- Facebook Inc
- Amazon.com Inc
- Apple Inc
- Ross Stores Inc
- Berkshire Hathaway
- Microsoft Corp
- Proctor and Gamble
- Johnson & Johnson
- Elevance Health Inc
How are Companies Selected?
Businesses are usually selected by committees that analyze the following factors of a company.
- Market Capitalization
- Sector Classification
- Financial Viability
- Treatment of IPOs
- Public Float
- Liquidity Domicile
A company is qualified for an IPO if they meet all the following criteria:
- An estimated market capitalization of at least US$4.6 billion or more.
- The company has to trade at a minimum of 250,000 shares in each of the six months before the evaluation period.
- The public float should be over 50%.
- Earnings are required to be positive both this year and within its most recent quarter.
- IPOs must be seasoned for 6-12 months before launching (i.e., satisfy all pre-marketing requirements).
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