The widely followed Standard & Poor’s 500 Index is the standard by which stock market performance in the U.S. is often measured, as it tracks 500 of the largest and most stable publicly traded companies in the country. The index is weighted by market capitalization, which gives more significance to companies with larger market values. The top 25 stocks in the S&P 500 by weight are the largest, most influential companies in the index.
Key Takeaways
- The S&P 500 is widely considered to be one of the best measures of stock market performance and the health of the U.S. economy.
- The 500 stocks tracked by the index represent the nation’s largest, most economically significant companies
- The S&P 500 is weighted by market cap. The larger the company, the more influence its stock price has on the overall index.
- The top 25 stocks in the index are important to follow because of their strong influence on the performance of the index and the economy at large.
As of Jan. 27, 2025, the S&P 500 (SPY) had increased in value by 1.3% since the beginning of the year. In January, the index rallied to a new high before late-month selling took it back down again. The rise of the Chinese artificial intelligence startup DeepSeek led investors to dump other AI-related tech stocks, including Nvidia (NVDA), which lost nearly $600 billion in market capitalization.
How are Stocks Selected for the S&P 500?
To be included in the S&P 500, a company must:
- Be based in the United States and trade publicly on a major U. S. exchange
- Maintain a market capitalization of $20.5 billion and a float-adjusted market cap of at least 50% of the index’s total company-level minimum market capitalization threshold
- Have reported positive earnings in the most recent quarter, along with the past four consecutive quarters
- Have a float-adjusted liquidity ratio of 0.75 or greater.
- Have traded a minimum of 250,000 shares in the previous six months before evaluation
The S&P 500 reconstitutes each June. Companies removed from the index are not replaced until the next annual reconstitution.
Top Sectors in the S&P 500
The table below lists the S&P 500’s top sectors by weighting as of Jan. 27, 2025. The information technology, financials, health care, and consumer discretionary sectors carry a cumulative weight of about 68%. Meanwhile, the least-weighted sectors include energy, utilities, and real estate—which have a combined weight of just 7.87%.
| Top 10 Sectors in the S&P 500 by Weight | |
|---|---|
| Information Technology | 33.34% |
| Financials | 13.29% |
| Consumer Discretionary | 11.42% |
| Health Care | 10.17% |
| Communications Services | 9.46% |
| Industrials | 7.46% |
| Consumer Staples | 5.28% |
| Energy | 3.26% |
| Utilities | 2.56% |
| Real Estate | 2.05% |
Top 25 Companies by Index Weight
These are the top 25 companies by index weight. Since the S&P Global website fails to disclose the weighting of component stocks, we used the S&P 500 exchange-traded fund (ETF), the SPDR S&P 500 ETF Trust (SPY), in order to cite index weighting. The ETF’s holdings are a bit different, but SPY closely reflects the S&P weights.
As of Jan. 27, 2025, here are the largest SPY holdings by weight:
| Top 25 Companies by Index Weight | ||
|---|---|---|
| 1 | APPLE (APPL) | 6.41% |
| 2 | MICROSOFT (MSFT) | 5.99% |
| 3 | NVIDIA (NVDA) | 5.39% |
| 4 | AMAZON.COM, INC (AMZN) | 4.61% |
| 5 | ALPHABET (GOOGL) | 4.38% |
| 6 | META PLATFORMS (META) | 3.13% |
| 7 | TESLA (TSLA) | 2.40% |
| 8 | BERKSHIRE HATHAWAY (BRK.B) | 1.94% |
| 9 | BROADCOM (AVGO) | 1.80% |
| 10 | WALMART (WMT) | 1.49% |
| 11 | ELI LILLY (LLY) | 1.46% |
| 12 | JP MORGAN (JPM) | 1.44% |
| 13 | VISA INC. (V) | 1.24% |
| 14 | MASTERCARD (MA) | 0.96% |
| 15 | UNITED HEALTHGROUP (UNH) | 0.96% |
| 16 | EXXON MOBIL (XOM) | 0.93% |
| 17 | ORACLE (ORCL) | 0.84% |
| 18 | COSTCO (COST) | 0.82% |
| 19 | NETFLIX (NFLX) | 0.80% |
| 20 | PROCTER AND GAMBLE (PG) | 0.77% |
| 21 | BANK OF AMERICA (BAC) | 0.70% |
| 22 | SALESFORCE (CRM) | 0.64% |
| 23 | ABBVIE (ABBV) | 0.60% |
| 24 | CHEVRON (CVX) | 0.60% |
| 25 | COCA COLA (KO) | 0.59% |
Why Are the S&P 500’s Top 25 Stocks Important?
The top 25 stocks in the S&P 500 by index weight are important to analyze because they can be used to gauge the health of the stock market and broader economy. These companies reflect the performance of key sectors and the benchmark itself.
The current period of outperformance by the technology sector, for example, shows how declining inflation, strong margins, and competitive positioning resulting in good cash flow can contribute to gains in the overall index.
How Do I Invest in the S&P 500 Index?
The simplest and easiest way to invest in the S&P 500 is to purchase the popular SPDR S&P 500 ETF (SPY), which reflects the minute-by-minute movements of the index. Other ETFs that also track the S&P 500 this way include the iShares Core S&P 500 ETF (IVV) and Vanguard S&P 500 ETF (VOO).
There are also index funds that reflect only the closing price at the end of the day, including the Vanguard 500 Index Fund (VFIAX) and Fidelity 500 Index Fund (FXAIX). For those interested in more complex strategies, options and futures are also available, such as E-mini S&P Futures contracts, although these are only for those wishing to speculate on the future value of the index.
Advantages and Disadvantages of Investing in the S&P 500 Index
The central advantage of investing in the S&P 500 is the wide diversification it offers across many sectors and industries. By investing in the index, an investor generally reduces the risk associated with buying individual stocks. Over the years, an investment in the S&P 500 can produce long-term growth for those willing to wait out the accompanying short-term volatility.
A disadvantage of S&P 500 investing is how concentrated the index is in the top-performing stocks, a factor that sometimes skews results and can result in increased volatility. Some investors prefer an S&P 500 Equal Weight Index, where each component has an equal weight without regard to the size of its market capitalization.
The Bottom Line
The S&P 500 index weights companies according to their market caps. Larger firms are more heavily weighted than small firms, which carries some risks. The tech sector, which includes giants like Apple, Microsoft, and Nvidia, has an enormous influence on index results. In general, the stock market’s health and that of the U.S. economy can be measured by analyzing the S&P 500’s top 25 components.
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As of the date this article was written, the author does not own any of the above securities.
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