150 Years Of The S&P 500

In 1956, Standard & Poor created a new stock market index. Composed of the top 500 (or so) individual company stocks in the U.S. stock market and weighted according to their market capitalization within the index, the index itself has become the standard gauge of the larger U.S. stock market. 2021 marks the 65th year the S&P 500 daily stock market index has been in existence.

But the index has a deeper history. In 1928, Standard Statistics Bureau, one of the pre-merger companies that later became today's Standard & Poor, created a daily composite stock market index made up of 90 individual stocks of U.S. corporations, with historical data going back to 1925 to provide some built-in history for the new index. The combination of 50 industrials, 20 railroads, and 20 utility companies provided one of the first broad measures of the U.S. stock market, expanding beyond the 30 industrial firms covered by the Dow Jones Industrial Average. Around the same time, Standard also created a weekly index to track the collective stock market performance of 500 U.S. companies, which is eventually what took over in 1956 as a daily index.

Of course, these companies didn't suddenly materialize into existence in 1928. Many of these firms have stock price data that extends back much earlier. In 1938, the Cowles Commission for Research in Economics worked out their equivalent market index performance going back to 1871, which means we really have 150 years worth of data for the U.S. stock market. Before 1871, the stock price data for publicly traded companies becomes too sparse to track, which is why the historical data only goes back this far.

We thought we'd mark the sesquicentennial for U.S. stock market data with the following charts, showing the average monthly index value, the trailing year dividends per share and trailing year earnings per share for the S&P 500 and its predecessor indices from January 1871 through December 2020. Please click the images to access full size versions of the charts.

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