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What is the S&P 500?

The S&P 500 Index tracks the prices of 500 leading U.S. companies that have shares listed on the New York Stock Exchange or the Nasdaq. Companies in the S&P 500 are considered to be large, prominent companies in leading industries and widely held by investors. Many are well-known businesses with services and products that many Americans use every day.

While the Dow Jones Industrial Average is often quoted by news outlets every day, the S&P 500 Index may be a better representation of the overall stock market as the Dow only includes 30 companies. Thousands of stocks are publicly traded, yet the S&P 500 is made up of the largest stocks and, therefore, captures the majority of the market’s overall value.

Jemma Financial Wisdom: Tracking the S&P 500’s movements over time can provide an indication of how well the overall stock market is performing. For stock mutual fund investors, the S&P is often used as a benchmark to help investors compare a fund’s performance to the market.

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