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S&P 500 definition
The S&P 500 is the headline US stock index, tracking around 500 of the largest companies listed on US exchanges and weighted by free-float market capitalisation. It is the most widely followed gauge of US large-cap equity performance.
Constituents are chosen by a committee against criteria such as size, liquidity, and profitability, and the index covers a large share of the total US market value across every major sector. Because it is market-cap weighted, the biggest companies carry the most influence, so a move in a mega-cap stock shifts the index more than an equal move in a smaller member.
The S&P 500 is often compared with the Dow Jones Industrial Average, but the two are built differently: the S&P 500 weights members by company size, while the Dow tracks just 30 stocks weighted by share price. You can take exposure through an index CFD, which tracks the index level without owning the underlying shares.
S&P 500 Example
You expect US large caps to climb, so you go long an index CFD that tracks the S&P 500. Say the index is at 5,000.
The index rises to 5,040, a gain of 40 points. Your profit is the 40 points multiplied by the value per point of your contract.
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