How the S&P 500 evolved over 25 years (2000–2025)
30th May 2025
What is the S&P 500 and why use it as a benchmark?
The S&P 500 (Standard & Poor’s 500) is a stock index comprising 500 of the largest publicly traded companies in the United States. It is a market-capitalisation-weighted index, meaning larger companies (by market value) carry more influence in its performance. Investors worldwide, including many British expats, track the S&P 500 because it is widely regarded as one of the best gauges of the U.S. stock market’s performance. In fact, the index covers roughly 70–80% of the total US equity market value and an estimated $13 trillion is indexed or benchmarked to it. In other words, it’s not just an American index, but a global barometer of equity market trends and a key benchmark for diversified portfolios.
Why use the S&P 500 in particular?
Its breadth and depth make it a powerful snapshot of the economy. The 500 companies span all major industries, providing a “who’s who” of corporate America - from technology giants and banks to healthcare, energy, and consumer brands. Because of this diversity, the S&P 500 is often seen as a proxy for the overall stock market and the U.S. economy. For high-net-worth investors (including British expats managing wealth abroad), the S&P 500’s performance and makeup offer valuable insight into global investment trends. It’s the most widely held equity index globally, used to benchmark countless funds and to inform asset allocation decisions.
The S&P 500 (Standard & Poor’s 500) is a stock index comprising 500 of the largest publicly traded companies in the United States. It is a market-capitalisation-weighted index, meaning larger companies (by market value) carry more influence in its performance. Investors worldwide, including many British expats, track the S&P 500 because it is widely regarded as one of the best gauges of the U.S. stock market’s performance. In fact, the index covers roughly 70–80% of the total US equity market value and an estimated $13 trillion is indexed or benchmarked to it. In other words, it’s not just an American index, but a global barometer of equity market trends and a key benchmark for diversified portfolios.
Why use the S&P 500 in particular?
Its breadth and depth make it a powerful snapshot of the economy. The 500 companies span all major industries, providing a “who’s who” of corporate America - from technology giants and banks to healthcare, energy, and consumer brands. Because of this diversity, the S&P 500 is often seen as a proxy for the overall stock market and the U.S. economy. For high-net-worth investors (including British expats managing wealth abroad), the S&P 500’s performance and makeup offer valuable insight into global investment trends. It’s the most widely held equity index globally, used to benchmark countless funds and to inform asset allocation decisions.
From 2000 to 2025: A dramatic shift in index composition
One of the most striking developments over the past 25 years has been how the S&P 500’s composition has changed. The index of 2025 looks very different from that of 2000 in terms of which sectors dominate and even which companies are on top.
Back in 2000, at the tail end of the 1990s bull market, the S&P 500 was riding the dot-com boom. Technology stocks had surged to unprecedented heights – by March 2000, the tech sector made up about one-third of the entire index by weight. Companies like Microsoft, Cisco, Intel and Oracle were among the largest components, alongside stalwarts such as General Electric and ExxonMobil. This tech-heavy mix helped fuel impressive gains in the late 1990s. However, it also meant the index was vulnerable when the dot-com bubble burst. From 2000 to 2002, the S&P 500 fell by roughly 50% as inflated tech valuations came crashing down. By 2003, technology stocks had shrunk to only about 14% of the index - a dramatic comedown from their one-third share at the peak. In hindsight, the 2000 index was skewed by speculative excess: tech companies then accounted for ~33% of S&P 500 market cap but only ~15% of its earnings, an imbalance that signalled overvaluation.
Fast forward to 2025, and the pendulum has swung back, this time with even larger implications. The S&P 500 today is once again dominated by technology, but the sector’s influence is arguably more entrenched and broader-based. The formal “Information Technology” sector alone now constitutes roughly 25–30% of the index (its highest share since 2000). Importantly, many of the biggest “tech” businesses today straddle multiple sectors (for example, Alphabet/Google is classified under Communication Services, Amazon under Consumer Discretionary). If we consider the total technology-oriented exposure in the index, including Big Tech names in various sectors, it recently reached an all-time high of about 40% of the S&P 500’s market cap. In other words, the market is even more top-heavy in tech than it was at the dot-com peak. The difference now is that today’s giants are far more profitable and established. Apple, Microsoft, Google, Amazon, and Nvidia generate substantial earnings and cash flow, whereas many dot-com era players had uncertain profits. This stronger foundation partly justifies tech’s renewed dominance. Indeed, tech companies today contribute a proportionate share of S&P 500 earnings (roughly in line with their weight in the index), unlike in 2000 when their index weight far outstripped their share of profits.
Aside from technology, other sector weightings have evolved significantly between 2000 and 2025. Two decades ago, the index had a more balanced feel - after tech, sectors like financials, healthcare, and consumer goods each held double-digit percentage weights. Energy was around 5–6% of the index in 2000, and industrial conglomerates (GE and peers) were prominent. Over the years, leadership rotated: by the mid-2000s, financial firms (banks, insurers) grew to be the single largest sector before the 2008 crisis, and energy spiked above 10% during the oil boom of the late 2000s. But post-2008, financials never fully regained their former size, and the 2010s saw the rise of tech and consumer-focused firms at the top. Today, healthcare and financials each hover around only ~10–13% of the S&P 500, and energy has shrunk to roughly 4%, near its lowest share in modern history. In fact, the collective value of the entire S&P 500 energy sector is now so small that in late 2019 Apple Inc. alone had a larger market capitalisation than all the energy companies in the index combined. This encapsulates how dramatically fortunes have shifted between “old economy” sectors and the new tech-driven economy.
Meanwhile, new sectors have emerged: for example, Communication Services (created in 2018) now includes former tech darlings like Google and Facebook (Meta), and Real Estate was carved out of financials. The S&P 500 continuously adapts - companies that falter or become obsolete are removed and new leaders from emerging industries take their place. Many names that were in the index in 2000 (e.g. Kodak, AOL, Sun Microsystems) are long gone, replaced by companies in areas like e-commerce, social media, digital payments, and electric vehicles. This churn reflects the broader economic evolution: the index today captures trends like the dominance of internet platforms, software and semiconductor firms, whereas 25 years ago it was more about industrials, telecoms and hardware.
One of the most striking developments over the past 25 years has been how the S&P 500’s composition has changed. The index of 2025 looks very different from that of 2000 in terms of which sectors dominate and even which companies are on top.
Back in 2000, at the tail end of the 1990s bull market, the S&P 500 was riding the dot-com boom. Technology stocks had surged to unprecedented heights – by March 2000, the tech sector made up about one-third of the entire index by weight. Companies like Microsoft, Cisco, Intel and Oracle were among the largest components, alongside stalwarts such as General Electric and ExxonMobil. This tech-heavy mix helped fuel impressive gains in the late 1990s. However, it also meant the index was vulnerable when the dot-com bubble burst. From 2000 to 2002, the S&P 500 fell by roughly 50% as inflated tech valuations came crashing down. By 2003, technology stocks had shrunk to only about 14% of the index - a dramatic comedown from their one-third share at the peak. In hindsight, the 2000 index was skewed by speculative excess: tech companies then accounted for ~33% of S&P 500 market cap but only ~15% of its earnings, an imbalance that signalled overvaluation.
Fast forward to 2025, and the pendulum has swung back, this time with even larger implications. The S&P 500 today is once again dominated by technology, but the sector’s influence is arguably more entrenched and broader-based. The formal “Information Technology” sector alone now constitutes roughly 25–30% of the index (its highest share since 2000). Importantly, many of the biggest “tech” businesses today straddle multiple sectors (for example, Alphabet/Google is classified under Communication Services, Amazon under Consumer Discretionary). If we consider the total technology-oriented exposure in the index, including Big Tech names in various sectors, it recently reached an all-time high of about 40% of the S&P 500’s market cap. In other words, the market is even more top-heavy in tech than it was at the dot-com peak. The difference now is that today’s giants are far more profitable and established. Apple, Microsoft, Google, Amazon, and Nvidia generate substantial earnings and cash flow, whereas many dot-com era players had uncertain profits. This stronger foundation partly justifies tech’s renewed dominance. Indeed, tech companies today contribute a proportionate share of S&P 500 earnings (roughly in line with their weight in the index), unlike in 2000 when their index weight far outstripped their share of profits.
Aside from technology, other sector weightings have evolved significantly between 2000 and 2025. Two decades ago, the index had a more balanced feel - after tech, sectors like financials, healthcare, and consumer goods each held double-digit percentage weights. Energy was around 5–6% of the index in 2000, and industrial conglomerates (GE and peers) were prominent. Over the years, leadership rotated: by the mid-2000s, financial firms (banks, insurers) grew to be the single largest sector before the 2008 crisis, and energy spiked above 10% during the oil boom of the late 2000s. But post-2008, financials never fully regained their former size, and the 2010s saw the rise of tech and consumer-focused firms at the top. Today, healthcare and financials each hover around only ~10–13% of the S&P 500, and energy has shrunk to roughly 4%, near its lowest share in modern history. In fact, the collective value of the entire S&P 500 energy sector is now so small that in late 2019 Apple Inc. alone had a larger market capitalisation than all the energy companies in the index combined. This encapsulates how dramatically fortunes have shifted between “old economy” sectors and the new tech-driven economy.
Meanwhile, new sectors have emerged: for example, Communication Services (created in 2018) now includes former tech darlings like Google and Facebook (Meta), and Real Estate was carved out of financials. The S&P 500 continuously adapts - companies that falter or become obsolete are removed and new leaders from emerging industries take their place. Many names that were in the index in 2000 (e.g. Kodak, AOL, Sun Microsystems) are long gone, replaced by companies in areas like e-commerce, social media, digital payments, and electric vehicles. This churn reflects the broader economic evolution: the index today captures trends like the dominance of internet platforms, software and semiconductor firms, whereas 25 years ago it was more about industrials, telecoms and hardware.
The rise of mega-cap titans and concentration risk
Along with sector changes, the concentration of market value in a few top companies has become a defining feature of the S&P 500 in 2025. We have witnessed the rise of a handful of mega-cap “titans” that tower over the rest of the market – and this raises both growth potential and risks for investors in the index.
In the early 2000s, the largest S&P 500 constituents were big, but not dominant to the degree we see now. At the start of 2000, the very largest stock (General Electric) accounted for roughly 4% of the index, and the top 10 companies together made up about 20–25% of the S&P 500’s market cap. By comparison, today’s top stocks take up a much bigger slice. The emergence of the so-called “Magnificent Seven” - Apple, Microsoft, Amazon, Alphabet (Google), Meta (Facebook), Nvidia, and Tesla - has driven a huge concentration at the top. As of late 2024, these seven companies alone represented over 30% of the S&P 500’s total value. According to one analysis, the Information Technology sector (dominated by a few of these names) is now more than double the size of the next largest sector by weight. This level of concentration is unprecedented in recent memory. In fact, by early 2025 the top 10 companies in the index constituted nearly one-third of the entire index - far higher than the concentration seen even at the peak of the dot-com bubble.
Why does this matter? In a cap-weighted index, when a few stocks become extremely large, they can heavily sway the index’s performance. For investors, this concentration risk means that the S&P 500 is less diversified than it appears - the fortunes of the index are increasingly tied to a few mega-cap companies. If those companies continue to excel, they can pull the whole index up. But if any stumble (due to regulatory issues, changing consumer taste, or valuation pressures), they could drag the index down disproportionately. For example, Apple and Microsoft alone now make up around 13% of the S&P 500; a major price move in one of these giants has a bigger effect on the index than a large move in dozens of the smaller constituents combined.
This is a double-edged sword. The upside of such concentration is evident in recent years: the tech titans have delivered outsized growth, helping propel the S&P 500 to new records. The downside, however, is that an index supposedly representing 500 companies and the broad economy can become over-dependent on one sector or a few names. It’s a situation that reminds some observers of the late 1990s, when tech also dominated, though today’s leaders are far more profitable and entrenched than the dot-com era high-fliers. Still, prudent investors are mindful that even great companies can face setbacks, and an index with heavy concentration might not offer as much cushion from idiosyncratic risks. In practical terms, it means S&P 500 investors in 2025 must keep an eye on those top stocks (the likes of Apple, Microsoft, Google, etc.), as they are effectively the bellwethers for the whole market now.
Market milestones: crashes and rebounds from 2000 to 2025
While the makeup of the S&P 500 has changed, one constant has been the market’s cycle of ups and downs. Over 25 years, investors have experienced exhilarating bull markets as well as gut-wrenching downturns. Understanding these major milestones puts the index’s long-term growth into perspective:
Along with sector changes, the concentration of market value in a few top companies has become a defining feature of the S&P 500 in 2025. We have witnessed the rise of a handful of mega-cap “titans” that tower over the rest of the market – and this raises both growth potential and risks for investors in the index.
In the early 2000s, the largest S&P 500 constituents were big, but not dominant to the degree we see now. At the start of 2000, the very largest stock (General Electric) accounted for roughly 4% of the index, and the top 10 companies together made up about 20–25% of the S&P 500’s market cap. By comparison, today’s top stocks take up a much bigger slice. The emergence of the so-called “Magnificent Seven” - Apple, Microsoft, Amazon, Alphabet (Google), Meta (Facebook), Nvidia, and Tesla - has driven a huge concentration at the top. As of late 2024, these seven companies alone represented over 30% of the S&P 500’s total value. According to one analysis, the Information Technology sector (dominated by a few of these names) is now more than double the size of the next largest sector by weight. This level of concentration is unprecedented in recent memory. In fact, by early 2025 the top 10 companies in the index constituted nearly one-third of the entire index - far higher than the concentration seen even at the peak of the dot-com bubble.
Why does this matter? In a cap-weighted index, when a few stocks become extremely large, they can heavily sway the index’s performance. For investors, this concentration risk means that the S&P 500 is less diversified than it appears - the fortunes of the index are increasingly tied to a few mega-cap companies. If those companies continue to excel, they can pull the whole index up. But if any stumble (due to regulatory issues, changing consumer taste, or valuation pressures), they could drag the index down disproportionately. For example, Apple and Microsoft alone now make up around 13% of the S&P 500; a major price move in one of these giants has a bigger effect on the index than a large move in dozens of the smaller constituents combined.
This is a double-edged sword. The upside of such concentration is evident in recent years: the tech titans have delivered outsized growth, helping propel the S&P 500 to new records. The downside, however, is that an index supposedly representing 500 companies and the broad economy can become over-dependent on one sector or a few names. It’s a situation that reminds some observers of the late 1990s, when tech also dominated, though today’s leaders are far more profitable and entrenched than the dot-com era high-fliers. Still, prudent investors are mindful that even great companies can face setbacks, and an index with heavy concentration might not offer as much cushion from idiosyncratic risks. In practical terms, it means S&P 500 investors in 2025 must keep an eye on those top stocks (the likes of Apple, Microsoft, Google, etc.), as they are effectively the bellwethers for the whole market now.
Market milestones: crashes and rebounds from 2000 to 2025
While the makeup of the S&P 500 has changed, one constant has been the market’s cycle of ups and downs. Over 25 years, investors have experienced exhilarating bull markets as well as gut-wrenching downturns. Understanding these major milestones puts the index’s long-term growth into perspective:
- 2000–2002 - Dot-Com Bust: The new millennium began with the unwinding of the technology bubble. After peaking in early 2000, the S&P 500 fell nearly 49–51% over the next two years as internet stocks crashed and a mild recession hit. The once high-flying Nasdaq darlings lost huge portions of their value. The S&P 500’s decline was steep and prolonged - it did not find a bottom until October 2002. Investors who chased hot tech stocks in 1999 learned painful lessons about valuation. Yet, despite this collapse, the index eventually stabilized and began to recover as the excesses were washed out.
- 2007–2009 - Global Financial Crisis: After a robust mid-2000s recovery (the S&P 500 hit new highs by 2007), the financial crisis struck. Triggered by a housing market collapse and banking system failures, the S&P 500 plummeted by 57% from its October 2007 peak to the trough in March 2009. This was the index’s worst drawdown since the Great Depression. Virtually every sector was hit hard, especially financial stocks. By early 2009 the S&P was at levels last seen in the mid-1990s (the index fell to around 676 points). However, aggressive actions by central banks and governments helped avert a total collapse, and by March 2009 a new bull market was born.
- 2009–2020 - Long Bull Market: The period from 2009 through the 2010s was essentially a decade-long bull market. From its 2009 low, the S&P 500 climbed well over 300% (more than fivefold including dividends) over 11 years. This was the longest continuous bull run in modern history, fuelled by low interest rates, technological innovation, and recovering corporate profits. There were a few minor hiccups (e.g. the European debt scare in 2011, a Chinese growth scare in 2015, a late-2018 pullback), but no sustained bear market in those years. By early 2020, the index had reached an all-time high around 3,386, and unemployment and inflation were low – a seemingly Goldilocks environment.
- Early 2020 - COVID Crash: The COVID-19 pandemic brought the bull run to an abrupt (if short-lived) end. In February–March 2020, as global economies shut down, the S&P 500 saw one of its fastest-ever declines. In just over a month, the index plunged 34% from its peak, entering a bear market at record speed. Investors braced for a severe recession as travel, trade, and normal life ground to a halt. Yet, this bear market turned out to be the shortest on record. Massive fiscal and monetary stimulus, combined with optimism about eventual vaccines, sparked a V-shaped recovery. By August 2020, the S&P had regained its pre-pandemic high, and it kept rising. The resilience of corporate earnings (especially in technology and stay-at-home beneficiaries) shocked many.
- 2021–2023 - Post-COVID Surges and Volatility: Following the Covid crash, the market surged to new records. 2021 saw a blockbuster rally - the S&P 500 returned ~27% that year, driven by tech and a rebounding economy. By the end of 2021 the index level crossed 4,700, an all-time closing high. However, 2022 brought a sharp correction. Soaring inflation and rising interest rates put pressure on stocks, particularly high-growth technology names. The S&P 500 fell about 19% in 2022 (including a brief bear market mid-year), marking its worst calendar year since 2008. Many of the mega-cap stocks that had led prior gains saw significant pullbacks. Then in 2023, optimism around cooling inflation and new tech trends (like artificial intelligence) helped the market recover yet again. By mid-2023 into 2024, the S&P 500 was climbing back toward its previous highs, led disproportionately by a few big tech winners.
The long view: evolution and resilience
The story of the S&P 500 from 2000 to 2025 is a story of constant evolution. Industries rise and fall, new companies emerge as leaders, and unexpected crises cause temporary turmoil. A high-net-worth investor looking back on this period can draw a few key lessons:
The story of the S&P 500 from 2000 to 2025 is a story of constant evolution. Industries rise and fall, new companies emerge as leaders, and unexpected crises cause temporary turmoil. A high-net-worth investor looking back on this period can draw a few key lessons:
- Markets evolve, and so does leadership: The biggest drivers of returns in 2025 are very different from those in 2000. Twenty-five years ago, Cisco, General Electric, Exxon, and Intel were among the titans; today it’s Apple, Microsoft, Google, and Amazon. Entire sectors that once dominated (like industrials or energy) now play second fiddle to technology. This reminds us that the investment landscape can shift dramatically - today’s winners can become tomorrow’s laggards and vice versa. Maintaining a well-diversified portfolio and an eye on long-term trends is crucial, since the composition of “the market” is never static.
- Concentration can amplify risk and reward: The S&P 500’s transformation into a tech-heavy, top-heavy index delivered strong gains as those tech firms prospered. But it also means investors must be mindful of concentration risk. True diversification sometimes requires looking beyond just the S&P 500, or ensuring one’s equity exposure isn’t overly tied to a handful of companies or a single sector. The index remains a fantastic core gauge, but it’s not immune to imbalances - as we see with the Magnificent Seven effect.
- “Zoom out” - focus on the long term: Perhaps most importantly, the S&P 500’s journey underscores the value of a long-term perspective. Investors who panicked during the dark days of 2002 or 2008 or 2020 and sold out would have locked in losses and potentially missed the subsequent recoveries. Those who stayed invested (or even rebalanced into the weakness) ultimately benefited when the market rebounded. Despite severe drawdowns along the way, the index’s long-run trend has been markedly upward. Every major decline in the S&P 500’s history has been followed by an eventual recovery to new highs. This is not to say losses are trivial or that timing doesn’t matter, but it emphasises that patience and discipline are rewarded by the market’s inherent growth over time.