2025-05-23
How the S&P 500 Became the World's Most Important Index
A brief history of the S&P 500, from its origins in 1928 to becoming the benchmark for the entire global stock market.
Origins of the S&P 500
The S&P 500 traces its roots back to 1923, when Standard Statistics Company began tracking 233 U.S. companies. By 1928, the index had expanded and was being calculated daily.
Why 500 Companies?
The number 500 was chosen to strike a balance — large enough to represent the broad U.S. economy, small enough to be manageable. These companies represent approximately 80% of the total U.S. stock market capitalization.
The Power of Long-Term Investing
One of the most striking facts about the S&P 500 is its long-term performance:
- Average annual return: ~10% (including dividends)
- Positive years: approximately 70% of all years since 1928
- Longest bull market: 2009–2020 (nearly 11 years)
Key Milestones
| Year | Event | |------|-------| | 1928 | Daily calculation begins | | 1957 | Expanded to 500 companies | | 1976 | First index fund launched (Vanguard) | | 2000 | Dot-com bubble peak | | 2009 | Post-crisis recovery begins | | 2024 | Index surpasses 5,000 points |
Conclusion
Whether you're a beginner or experienced investor, understanding the S&P 500's history can help you make better long-term decisions. Use our calculator to see exactly how your investment would have grown.