The S&P 500 consists of nearly 500 stocks of the big firms in the American capital market.

The Dow serves to be the indicator for the “heaviest” companies in the market, the S&P is said to reflect the entire American economy in the capital market; however, the recession trends in 2009 is confusing the indications..

The S&P is based on both the stock price and market cap of each company.

Considering the base index (i.e. the first index published) was 100 points (=100%), the subsequent indices will either increase or decrease per the cumulative increase or decrease of the stocks which are included in the index.

For instance, if the base value of the index were $25 billion = 100 points, then the total value of the index will increase by 20% to $30 billion, and the index will be 120 points.

The greater the weight of the individual company in the index, the more will be its influence in the level of the index.