Friday, May 25, 2018
Business

Q&A: S&P 500 best reflects health of Corporate America

NEW YORK — As the Standard & Poor's 500 stock index notching a record close Thursday, here's a look at the index, its history and its significance.

Why should I care about what happens to the S&P 500?

If there's a U.S. stock mutual fund in your retirement account, it's probably tied to it. More funds and more money chase after the S&P 500 than any other U.S. stock index. Some 1,359 funds worth $2.8 trillion track the S&P. The Dow Jones Industrial Average, by contrast, has just six followers.

Which index do professional investors follow?

For anyone working in financial markets — professional investors, academic types — the S&P 500 is the main barometer. It's built to mirror the overall stock market, and it's a measure of how well Corporate America is doing.

Which industries have powered the index up since 2009?

The answer shows just how nervous everybody was during the financial crisis. Back then, investors ditched banks and companies selling cars, jewelry and other goods. Since March 2009, banks have more than tripled, gaining 212 percent, according to FactSet data. Those so-called consumer-discretionary companies have gained even more.

Which S&P 500 company has done best since the market bottom?

Wyndham Worldwide, a manager of hotels and resorts, has had the best run over the past four years — by far. Wyndham's stock has soared 2,130 percent since 2009, according to FactSet.

How long has the index been around?

Since March 4, 1957. That's when Standard & Poor's took its indexes that tracked industry groups — transportation, utilities and financials — and merged them with the old S&P 400. It gained in popularity throughout the 1960s, as researchers began applying the tools of statistics to politics, health care and, eventually, markets.

What are other highlights and lowlights for the S&P?

Its worst day was Oct. 19, 1987 — Black Monday — when the index plunged 21 percent, losing 57.86 points, to end the day at 224.84.

Its best day was Oct. 13, 2008, when governments in the U.S. and Europe announced sweeping plans to shore up the battered global financial system. The index rose by 104.14 points, or 12 percent, its biggest one-day jump in points and percentage.

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