The S&P 500 has gained nearly 19% so far in 2019 with most constituents preparing to release 3rd quarter earnings reports in the coming weeks. About 50% of S&P 500 constituents have already released their earnings and the results are 2% above the consensus estimates. On Monday, October 28, The S&P 500 index surged up 0.6% to an intraday record high of 3,041.81.
The factors affecting the S&P growth expectations are rising costs, the rising US dollar and ongoing trade wars between China and the USA. Analysts expect significant movement up and down while trade negotiations are ongoing with overall growth expected to continue with 2.5%-3% for the remainder of 2019.
Trade USA 500 - US500 CFD
The S&P 500 index is made up of 500 of the largest publicly traded corporations in the USA and is considered one of the strongest benchmark indicators of the overall US economy. Companies listed on the S&P 500 have an average of $51 billion in market capitalisation and together capture over 80% of the available market capitalisation in the US economy.
The S&P 500 is comprised of companies in 11 key sectors of the economy with the top 5 sectors accounting for just under 70% of the total percentage of the index. The top 5 industries are:
- IT – 21.9%
- Health Care – 13.7%
- Financial – 12.9%
- Communication Services – 10.4%
- Consumer Discretionary – 10.1%
S&P 500 market overview
The S&P 500 is a capitalisation-weighted market index which means that the individual components are weighted according to the total market value of their outstanding shares. Outstanding shares are only those which are available to be freely traded publicly and not controlling shares. The index is considered to be the most representative of the US economy as it gathers 500 of the largest public companies in the country, with a total value of approximately $3.4 trillion USD. The constituents are reviewed quarterly and inclusion in not strictly based on market capitalisation size. Selection is reviewed by committee and based on eight criteria:
- Market Capitalisation – Minimum of $8.2 Billion
- Liquidity – Ratio of annual volume of shares traded and market capitalization
- Domicile – Must be based in the USA
- Public Float – Minimum 50% of shares must be publicly traded
- Sector Classification – Must operate in at least one of the sectors covered by S&P 500
- Length of Time Public – Must have been publicly traded for a minimum one year
- Stock Exchange – Must be listed on NYSE or NASDAQ
- Financial Viability – Must show positive earning sin previous quarter and aggregate profit in last 4 years
Top 5 S&P 500 market movers
Chipotle Mexican Grill (CMG)
As the S&P 500 top gainer thus far in 2019, CMG has a market capitalisation above $22 billion and + 91% YTD stock price growth. Founded in 1993 and undergoing rapid growth with investment from MacDonald’s in 1998. CMG is a fast-casual restaurant chain focused on Mexican style cuisine. It has operations in USA, UK, Canada, Germany and France and was added to the S&P 500 on April 27, 2011. CMG has recently opened its first drive through, opening a new door for growth within the company.
KLA Corporation (KLAC)
As one of the S&P 500 biggest movers in 2019, KLA Corporation has a market capitalisation above $24 billion and +76% YTD stock price growth. Formed in 1997 with the merger of KLA and Tencor Instruments KLA is a capital equipment company specialised in semiconductor manufacturing equipment and yield management systems. Since the merger in 1997, the corporation has acquired more than 27 additional companies. KLA global operations in manufacturing, R&D and support are located in the USA, Europe, Israel, Japan and throughout the Asia/Pacific region.
Lam Research Corporation (LRCX)
As one of the S&P 500 top movers in 2019, LAM Research has a market capitalisation above $34 billion and +71% YTD stock price growth. LAM research was founded in 1980 by Dr. David K. Lam and currently has more than 11,000 employees. LAM Research is specialised in the design, manufacturing and sales of semiconductor processing equipment utilised by other companies in the production of microchip technology. The vast majority of consumer and government electronics using advanced processing chip technology were manufactured using LAM research equipment.
Copart Inc. (CPRT)
One of the S&P 500 movers in 2019, Copart Inc. has a market capitalisation above $18 billion and +70% YTD stock price growth. Founded in 1982 as a vehicle auction company, Copart experienced rapid growth by creating an online virtual auction site for primarily salvage vehicles. They have physical operations in the USA, Germany, Ireland, Brazil, Spain, UAE and Finland.
Target Corporation (TGT)
One of the S&P 500 gainers in 2019, Target Corporation has a market capitalisation above $57 billion and +62% YTD stock price growth. Founded in 1902 by George Dayton in Minneapolis, Target has undergone numerous name changes in its history. It is currently the eighth largest retailer in the USA and the 39th largest overall corporation. The first target store was opened to the public in 1962 and the company now operates in financial and retail services (credit cards), sourcing services and private label brands.
In the end
The S&P 500 remains an evergreen market for traders all over the world. Being a home index for some of the largest global companies, the S&P 500 is one of the most sought after investment instruments for those looking to get a slice of the blue-chip stocks.