S&P 500

With high and regular historic gains, an average daily volume of billions of dollars and containing some of the largest companies in the world, trading the S&P 500 is appealing to investors for many reasons. This guide contains all the information you need to find the best S&P 500 brokers, learn how to trade the stock index and develop an effective strategy. Use our ranking of the top S&P 500 brokers and platforms to get started.

Choosing S&P 500 Brokers

One of the key steps to effective and profitable trading of the S&P 500 index is selecting a good broker. This tutorial breaks down what to look for in the best broker to buy or sell an S&P 500 asset.

Instruments

There are a variety of instruments available for trading at S&P 500 brokers. These include futures, options, binary options and other forms of margin trading. Lucrative day trading and swing trading strategies are possible using leveraged products such as CFDs and e-mini S&P 500 futures contracts.

In addition, S&P 500 mutual funds and tracker funds offer low-cost investing in the index, with investments automatically adjusted to reflect stock weightings and index entries and exits.

Investments in single companies from the S&P 500 are also possible. Traders can find these stocks on exchanges like the NYSE and Nasdaq.

Some firms, such as Interactive Brokers, will also offer several investing vehicles under one roof. These S&P 500 brokers can make trading considerably simpler for investors who wish to test different strategies and approaches.

Fees

It goes without saying that investors will wish to minimise fees and spreads when investing in any market.

Often, S&P 500 brokers will offer different fee structures, with some levying floating spreads for trades and others a percentage commission. In addition, some S&P 500 brokers may levy account management or inactivity charges.

Importantly, the type and price of any charges will depend on the instrument used. However, due to the high trading volume of the index, spreads and charges will typically be low on most instruments.

For active traders, Pepperstone offers spreads from 0.4 points on the S&P 500 with up to 1:20 leverage. Alternatively, CMC Markets offers a minimum spread of 0.3 points on the S&P 500.

S&P 500 Investing Conditions – CMC Markets

As S&P 500 mutual funds and ETFs are tracker funds rather than actively managed, fees can be as low as 0.07% for ETFs like the Vanguard UCITS ETF.

In many cases, UK investors will not need to worry about forex fees and trading in US Dollars. This is because many S&P 500 instruments are created by UK financial companies and offered to investors in British Pounds.

Account Types

Many S&P 500 traders will use the index for long-term investing. Many tax-advantaged accounts, such as the SIPP, Stocks & Shares ISA and LISA, are available to UK traders that suit this passive investment style.

However, these accounts will not suit active traders requiring additional market data and advanced live charts to monitor the index.

To find the best broker to buy S&P 500 over the short or long term, ensure that a brokerage supports the account type that suits your investment style.

Platforms & Apps

As with account types, the best platform for the S&P 500 is an individual choice. Some investors favour simplicity, while others require advanced charting and level 2 or 3 data integration, especially when trading derivatives such as options.

For those who regularly invest on the go, prioritising S&P 500 brokers with the best app is sensible. Popular platforms and apps include MetaTrader 4 and MetaTrader 5.

Security & Regulation

Choosing a broker with top-tier regulation from reputable bodies such as the UK Financial Conduct Authority (FCA) can help investors steer clear of scams when online investing.

Additional security measures to look out for include fund insurance, negative balance protection, two-factor authentication and brokers that use segregated accounts for client funds.

What Is The S&P 500?

The S&P 500 is the stock index with the highest market capitalisation and boasts an average daily trading volume above $4 billion. However, the index didn’t always have such wealth behind it.

S&P 500 History

The first form of the S&P 500 was created in 1923 by Standard Statistics Company as a weekly-calculated index of 233 US-based companies. Following a merger with Poor’s Publishing, these firms became Standard & Poor’s – the “S&P” in the S&P 500.

The current 500 company form of the S&P 500 was introduced in March 1957, when Standard and Poor’s launched the S&P 500 Stock Composite Index. From this point, the index has undergone minor tweaks but remains similar to its 1957 inception.

Unlike some other major global indices, inclusion within the S&P 500 is not just based on the trading economics of each equity. A company must pass a committee selection process in addition to meeting minimum market capitalisation requirements, NYSE or NASDAQ listing and minimum volume requirements.

Performance

One of the reasons that investors regard the S&P 500 so highly is its consistent annual returns. Since the index started issuing dividends in 1970, trading the S&P 500 has averaged an impressive total return of over 15% per year.

While the index has a strong dividend history of offering investors competitive returns in the 3-5% range, the S&P 500 is now dominated by growth-oriented equities, which tend to pay little, if any, dividends. As a result, recent dividend yields have been notably smaller, such as the 1.29% paid in 2021 and the 1.71% paid in 2022.

The S&P 500 record trading volume occurred in late 2008, with daily volume reaching over $11 billion.

The S&P 500 all-time high happened on January 3rd 2022 when it reached 4796.56 points.

The S&P 500 all-time low occurred on August 12th 1982, when it closed at 102.42 points.

Investors can view the entire S&P 500 price history through free charts provided by services like TradingView or a broker’s platform.

Why Is It Popular?

The consistency of its price history is one reason the S&P 500 is viewed as one of the most dependable indices. In addition, the long-term returns of the index make it a favourite for UK personal pensions such as SIPPs or LISAs.

Many S&P 500 brokers also offer a range of instruments, including CFDs, options and futures.

Live Price Chart

Top Stocks

The S&P 500 comprises 503 US equities symbols, weighted by the market capitalisation of their publicly traded shares.

Of the entire companies list, over 18% of the index weighting is currently made up of the five biggest stocks in the S&P 500. The share price of these assets will have a significant impact on the performance of the index.

The 5 largest companies in the S&P 500 are currently:

• #1: Apple Inc. (AAPL)
• #2: Microsoft Corporation (MSFT)
• #3: Amazon Inc. (AMZN)
• #4: Alphabet Inc. Class A (GOOGL)
• #5: NVIDIA Corporation (NVDA)

Other notable equities in the S&P top 10 include Tesla (TSLA), Berkshire Hathaway Inc. Class B (BRK.B) and Exxon Mobil Corporation (XOM).

The S&P 500 By Sectors

The S&P 500 is fairly well diversified by industry sectors. This ensures that the index is not overly exposed to individual sector performance.

The primary industry sectors are 27.48% Technology, 14.58% Health Care, 11.18% Consumer Discretionary, 10.9% Communication Services and 9.89% Financials.

Pros Of Investing In The S&P 500

• UK-Based Instruments – Many UK firms have pound-traded S&P 500 vehicles for investors. This means that UK traders can invest in the S&P 500 without forex fees and within UK market hours.
• Consistent Total Returns – With an average annual total return of over 15% per year since 1970, the S&P 500 remains the most consistent index for long-term investing in the stock markets.
• Contains Leading Global Stocks – S&P 500 brokers contain top global equities such as Microsoft (MSFT), Tesla (TSLA) and Apple (AAPL). These high-flying growth stocks provide investors with exposure to some of the largest companies and sectors in the modern world.
• Wide Range Of Instruments – From CFDs to binary options and ETFs to e-mini futures, the S&P 500 is available to trade through a wide range of products at leading brokers.
• Informative Market – The performance and price of the S&P 500 are often used as a barometer of the US market as a whole, whether this is merely to observe and gauge market health or to trade and hedge other investments.

Cons Of Investing In The S&P 500

• Uneven Weightings – While investors may believe that a stock index with 500 companies would be well diversified, when trading with S&P 500 brokers, traders should note that the top 10 stocks make up over 25% of the total index price.
• Low Dividends – Despite historically high dividend yields, the current S&P 500 is primarily made up of growth stocks with small or no dividends. As a result, recent dividend yields sit below the 2% mark.
• Singular Country – The S&P 500 is made up of 503 symbols from 500 companies, which are all from the US. Investors that want regional diversification should choose another index or product.

Strategies

Want to know how to day trade the S&P 500? Or perhaps you are interested in a long-term investment or an options play? Here are five popular S&P 500 strategy ideas:

Long-Term Investing

The idea of investing in a major stock market over a long period is championed by veteran investors Warren Buffet and other finance experts.

While past performance is no indicator of future returns, the historical stability and considerable total returns when investing in the S&P 500 over the last 50 years and beyond suggest that the index is suitable as a long-term investment vehicle at leading brokers.

An advantage of this strategy is its passivity. Whether investing via a mutual fund or ETF, the best brokers to buy the S&P 500 allow investors to set up regular purchases to take advantage of pound cost averaging.

With this strategy, trading at S&P 500 brokers is not about choosing when to buy or sell, nor will investors have to conduct any further technical or fundamental analysis on the index.

There are also many low-cost UK ETFs and mutual funds available at the top online brokers.

Single Stock Picking

As one of the biggest indices in the world in terms of market cap and average daily trading volume, the S&P 500 is a great place to look for single-stock speculation.

Whether you want to buy or sell short, there are ample opportunities for intraday and swing trading of S&P 500 equities, and even chances for investing based on dividend yield for individual companies.

Support & Resistance

Technical analysis can be an effective way of creating S&P 500 signals due to the index’s heavy institutional and automated trading. One way to use this data to create a strategy is to identify key support and resistance levels.

Many technical tools and indicators offered by S&P 500 brokers can identify potential support and resistance levels. These include Fibonacci overlays and moving average indicators like the Ichimoku cloud, Moving Average Convergence/ Divergence Indicator (MACD) and Money Flow Index (MFI).

Using tools such as these helps investors spot trends and a viable trading range for the S&P 500, even without a complete understanding of the index’s trading economics.

Covered Calls

For investors that want to receive stable dividends underlined by a strong and liquid market, trading covered calls on the S&P 500 can be a good option.

A covered call is an options strategy in which an investor holds a long position in an asset and sells call options on that same asset to generate income from the option premiums.

Traders can create these contracts manually through an options broker, or invest in an S&P 500 covered call ETF such as XYLD to automate this process. Dividends are paid monthly with competitive returns that can exceed 10% annually.

Scalping

For investors looking for an options or e-mini s&p 500 futures strategy, scalping can be a lucrative form of online investing available at the best brokers.

Scalping is a high-frequency strategy often involving day trading securities to profit from small price changes and discrepancies between providers. Investors can use an S&P 500 calendar to find periods of potential volatility, such as top 10 stocks’ earnings reports, regional GDP news or announcements from the US federal bank.

Trading Hours

The S&P 500 live opening hours are between 14:30 GMT and 21:00 GMT from Monday to Friday. US-based ETFs and mutual funds will typically follow these times, though UK products based on the S&P 500 may vary.

However, pre-market and after-hours trading is available for some stocks through various S&P 500 brokers. The inclusion of S&P 500 overnight investing takes the full opening hours to 09:00 GMT until 01:00 GMT from Monday to Thursday, and 09:00 to 22:00 GMT on Friday.

These hours differ between markets and products such as futures and CFDs, with indices operating 24/5 and e-mini futures hours trading 11 hours a day from 23:00 GMT until 22:00 GMT Sunday to Friday.

There are no weekend trading markets for the S&P 500.

Bottom Line On S&P 500 Brokers

With a wide range of available instruments, great historical gains and plenty of profitable strategies, the S&P 500 is hugely popular with retail investors.

Choosing the best S&P 500 brokers can be overwhelming due to the number of firms available. However, use this guide to compare S&P 500 platforms to find a suitable provider. Alternatively, choose from our list of top-rated S&P 500 brokers that accept UK traders.

FAQ