Finance History | S and P Global — Five Hundred Names Calculated by the Hour on 4 March

People treat S and P Global as the glass slab at 55 Water Street that always ran a credit rating and an index license from an S and P 500 book.

The first 500-stock book was a computer job.

On 4 March 1957 Standard and Poor's published the expanded Composite that the press had previewed a week earlier at the Lawyers Club.

The new gauge covered 425 industrials, 15 railroads and 60 utilities.

Those 500 names were chosen because they already represented more than 90 percent of U.S. common-stock value.

Melpar, a Boston contractor, supplied the electronic calculation that let the firm print the number hourly instead of weekly.

The New York Times put the new average into its market table the next morning.

The index opened near 44.

A 90-stock daily index had existed since 1926, and a weekly 233-stock list since 1923.

What 1957 changed was breadth plus speed.

A price-weighted thirty-stock average still needed a human to adjust for splits.

A capitalization-weighted 500-name file could be rebuilt when a share count changed, which is why later funds could copy it.

The house itself was older than the file.

Henry Varnum Poor had published History of the Railroads and Canals of the United States in 1860 so bond buyers could read a road's accounts.

Standard Statistics Bureau, founded in 1906, rated mortgage bonds and built the early averages.

The two firms merged in 1941 as Standard and Poor's.

In 1957 the merged shop still worked from Hudson Street, not from Water Street.

McGraw-Hill bought the firm in 1966.

Finance stocks were not added to the 500 until 1976, when the mix became 400 industrials, 40 utilities, 40 financials and 20 transports.

The 1957 decision is the one that still sits under every index-fund prospectus.

Five hundred names, weighted by what the market said they were worth, updated on a machine instead of a clipboard.

Photo: Financial District streetscape near the later Water Street offices, via Wikimedia Commons.