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S&P 500 explained: what moves it, and when to watch

When people say "the market was up today", they usually mean the S&P 500. It's one number that sums up 500 of the biggest companies in America.

Market guide · 6-minute read · Updated 2026-10-21

At a glance

An Index is just a scoreboard. You can't buy the S&P 500 itself. You trade something that follows it, like a fund or a futures contract.

How it's built

The index started in its 500-stock form in 1957. It isn't simply "the 500 biggest". A committee picks companies that meet rules on size, how easily the shares trade, and recent earnings.

Each company counts in proportion to its Market cap, using only the shares the public can trade. So a huge company moves the index far more than a small one.

In plain words: a 2% move in one of the giants can matter more than a 2% move in fifty of the smallest members put together.

What moves it

The S&P 500 reacts to anything that changes what US companies are worth.

• The Fed. The FOMC meets 8 times a year. The statement comes out at 2:00 pm ET and the press conference starts at 2:30 pm.
• Inflation. The CPI report lands at 8:30 am ET, an hour before the open. Futures react first; the index catches up at 9:30.
• Jobs. The monthly jobs report, usually the first Friday at 8:30 am ET, often sets the tone.
• Big-company earnings. A handful of very large tech companies make up a big slice. Their reports, usually after the close, can swing the next day's open.
• Bond yields. When long-term rates jump, stocks are often squeezed. See how interest rates affect stocks.

When it's busiest

The index itself is only calculated while the US stock market is open.

• 9:30 – 10:30 am ET: the open. The biggest burst of trading and the widest swings.
• Midday, roughly 11:30 am – 2:00 pm ET: often slower.
• 3:00 – 4:00 pm ET: volume returns as funds trade into the close.

Outside those hours, ES futures keep trading almost around the clock. That's why a chart of the index can open with a Gap. The ET hours stay the same all year; only Europe and Asia shift for a few weeks around clock changes.

Its personality

• Broad and steady, for stocks. With 500 companies, one bad report rarely sinks it. It usually moves less in percentage terms than the Nasdaq-100.
• Slow climbs, fast drops. Over its long history, falls have often come faster than rises. Both are possible at any time.
• Watched levels. Round numbers and yesterday's high and low draw attention from many traders at once.
• Heavy at the top. Because of the weighting, a few giants can drag it up or down on their own.

Reading it with our method

Start on the daily chart. Mark the last places price turned around. Is it making higher highs and higher lows, or the reverse? That's your direction.

Then drop to a smaller chart and only look for trades that agree with it. A level only counts as broken when a candle body closes past it. A tail poking through at 9:31 am doesn't count.

Set your stop from the chart, then work out your size. If you use an ETF, the position size calculator turns your stop into a number of shares. If you use futures, the futures tick value calculator does the math per contract.

Common mistakes

• Treating the index like a stock you can buy. You trade a fund, a future or an option on it. Each has its own costs and risks.
• Judging the whole market by the index. A few giants can lift it while most members fall.
• Trading the first minute of a CPI day. The 8:30 am move often reverses. Many traders wait for a few candles to close.
• Forgetting the gap. Overnight news shows up at 9:30 am as a jump. Your stop can't stop that jump.

Questions