The S&P 500 index is calculated using a market capitalization-weighted methodology, which means that each company in the index is weighted according to its total market value. The formula for calculating the index is:

Index Level = Sum of Market Capitalizations of All Constituents/Index Divisor

Here's how it works:

1. Market Capitalization: The market capitalization of each company is determined by multiplying the company's stock price by its total number of outstanding shares.
2. Weighting: Each company's weight in the index is proportional to its market capitalization relative to the total market capitalization of all 500 companies.
3. Index Divisor: The index divisor is a proprietary figure used to normalize the index value. It accounts for corporate actions like stock splits, dividends, and other adjustments to ensure that these events don't distort the index level.

For example, if a company has a market capitalization of $100 billion and the total market capitalization of the index is $20 trillion, that company would represent 0.5% of the index.

This market-cap-weighted approach means that larger companies have a more significant impact on the index's performance. The S&P 500 is recalibrated regularly to reflect changes in the market capitalization of its constituent companies and to maintain the index's accuracy as a representation of the U.S. stock market.