Standard & Poor’s indexes are statistics that are used to measure the level of American stock market prices. These indexes are compiled and published by Standard & Poor’s Corporation, an investment research and advisory firm.
The best-known of the measures is the Standard & Poor’s 500 Index. It reflects stock prices for 500 companies whose shares are traded on the New York Stock Exchange. Altogether, the stocks of these companies make up about 75 percent of the market value of all stocks listed on the exchange.
Standard & Poor’s computers calculate the 500 Index every five minutes of each business day. The index compares current stock prices with average prices during the period 1941-1943, which is called the base period. The average prices during 1941-1943, called base prices, are assigned a value of 10. Current index figures indicate how many times greater than the base prices current average prices are. For example, an index level of 250 means that average share prices are 25 times higher than the base prices. The 500 Index weights each price according to the total market value of the corporation’s publicly owned shares, so that larger companies affect the index more than smaller ones do. Many investors consider the 500 Index more valuable than the Dow Jones Industrial Averages, which are based on the sum of stock prices of just 30 companies.
The Standard & Poor’s Corporation also prepares industry surveys, which appear in its weekly publication The Outlook. The surveys provide prices and other statistics on more than 50 industries, giving an overview of the strengths and weaknesses of each industry. In addition, the company publishes separate indexes daily for transportation stocks, for utility stocks, for financial stocks, and for bonds.
