The S&P, or Standard and Poor, 500 is a market index that does the exact same thing as the Dow Jones. A market index tracks a handful of companies and averages out their growth, or lack thereof, to report a single number that indicates the general well-being of the stock market, and thus the American economy. The major difference between the S&P and the Dow is that the Dow only tracks the 30 biggest companies in each sector while the S&P tracks, as their name would suggest, 500 companies. All of them are large companies, but not like the 30 industry leaders the Dow tracks. The S&P 500 is a market value weighted index which means each stock’s weight is proportionate to its market value. That means, for example, that company one, which is the biggest, will have a far greater impact on the number S&P reports at the end of the day than company 500, which is the smallest, will. There is some debate over which index is the best representation of the market between the Dow and S&P 500. As Investopedia.com explains, “The S&P 500 is one of the most commonly used benchmarks for the overall U.S. stock market. The Dow Jones Industrial Average (DJIA) was at one time the most renowned index for U.S. stocks, but because the DJIA contains only 30 companies, most people agree that the S&P 500 is a better representation of the U.S. market. In fact, many consider it to be the definition of the market.” CNBC’s Jane Wells would seem to agree with that saying, “Even though the Dow comprises 30 of the biggest, most well-established companies in the U.S., the S&P 500 is often considered a better barometer, not only because of the breadth and depth of companies represented, but because many of those firms represent the future.” Robert Kaplan, former vice chairman at Goldman Sachs and currently a professor at the Harvard Business School says that most money managers benchmark themselves against the S&P. The Dow, Kaplan explains is still considered by so many as the leader, and still listed first on almost every news outlet simply because, “We’ve had it since the 1890s, it’s historic. I don’t think [the Dow] reflects the economy as well as the [S&P 500], but, listen, any time you pick the top 30 data points, it gives you a pretty good indication.” So, both do the same thing, both are great indicators, but S&P500 is the one bringing up the rear on the news and the one you want to pay attention to the most.