The Standard and Poor 500 is a stock market index of 500 top stocks on the New York Stock Exchange, according to About.com. The S&P 500 tracks the value of the shares these 500 companies have issued in order to get an overall picture of the stock market.
The minimum criteria that a company must meet in order to qualify for the S&P 500 includes that the company must be a U.S company with a stock price over $1 and a market cap of more than $4 billion, reports About.com. The company must show positive earnings for four consecutive quarters and be listed on the NYSE or the NASDAQ, with at least half of its stock publicly owned. Additionally, the makeup of S&P 500 companies should be representative of the balance of industrial sectors in the U.S. economy, such as information technology, financial, energy, telecom and consumer staples.
The S&P 500 has some notable differences with the other major stock indices, according to About.com. It has fewer large-cap stocks than the Dow Jones, which is the world's most commonly used market indicator. It also has fewer tech stocks than the NASDAQ. Despite these differences, these three indices generally move in a similar pattern and can all be used to give an informative picture of the strength of the U.S. economy.