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Why is the S&P 500 used as a benchmark for market performance so often? Ask a Fool  5 Days ago

Source:   USA Today  

However, the Dow simply isn't a great representation of the overall stock market. For starters, the index only includes 30 companies, so it's just a small cross-section of the thousands of companies in the market.

The Dow also is a price-weighted index, meaning higher-priced stocks count more, even if they represent smaller companies. For example, Goldman Sachs, with a share price of about $230, has roughly five times the influence on the index as $48-per-share Verizon Communications, even though Verizon is more than double the size of Goldman.

On the other hand, the S&P 500 includes 500 companies that combine to represent about three-quarters of the stock market in terms of market capitalization. And, the S&P 500 is a market cap-weighted index, meaning the larger companies have more influence over the index.

In short, the S&P 500 is a much better representation of the overall stock market, which is why it's the benchmark so many investors and fund managers compare their performance against.

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