The S&P/TSX Composite and S&P 500 track different equity markets. Canada’s benchmark has substantial exposure to banks, materials and energy, while the US index gives much greater weight to technology. Both use float-adjusted market capitalization, but their sector mix, concentration and currencies create different sources of risk for Canadian investors.
Imagine oil prices climbing and Canadian mining shares rallying on the same day that American technology stocks sell off. The TSX Composite could finish higher while the S&P 500 falls. Nothing about that outcome would be especially mysterious: the two benchmarks own different businesses in different proportions.
Calling both indexes “North American stocks” hides that distinction. A bank-heavy market responds differently to credit conditions than a technology-heavy market responds to semiconductor demand or software earnings. Currency movements add another variable for Canadians comparing their local market with US shares.
Understanding the difference is useful whether you own an index-tracking fund or explore index trading through another financial instrument. The index name identifies the market. Its underlying holdings explain much more about what can move it.
What is the difference between the TSX and the S&P 500?
The S&P/TSX Composite is the headline benchmark for Canada’s equity market, while the S&P 500 measures the US large-cap segment. According to S&P Dow Jones Indices, the latter covers approximately 80% of available US equity-market capitalization. Neither represents every listed company in its country.
Both indexes are weighted by float-adjusted market capitalization: a company with a higher market value in publicly available shares generally has greater influence. The Canadian Composite has broader size coverage than the US large-cap benchmark and includes eligible common stocks and income trust units under its methodology.
| Feature | TSX Composite | S&P 500 |
| Market | Canadian equities | US large-cap equities |
| Index currency | Canadian dollars | US dollars |
| Weighting | Float-adjusted market cap | Float-adjusted market cap |
| Largest sector, August 2026 | Financials | Information Technology |
| Prominent exposures | Banks, mining and energy | Technology and other large US companies |
| Small-cap representation | Broader size coverage, subject to eligibility | Separate US indexes cover mid- and small-cap companies |
Which sectors dominate each index?
The strongest contrast is sector allocation. Official S&P Dow Jones Indices figures dated 31 August 2026 show financials, materials and energy accounting for almost 70% of the Canadian benchmark. Information Technology alone made up 37.9% of the S&P 500.
| Sector | TSX Composite | S&P 500 |
| Financials | 34.0% | 12.3% |
| Materials | 19.0% | 1.8% |
| Energy | 16.8% | 3.5% |
| Information Technology | 8.0% | 37.9% |
| Industrials | 10.0% | 8.3% |
| Health Care | 0.3% | 9.3% |
| Communication Services | 1.6% | 9.5% |
Sources: S&P/TSX Composite and S&P 500, sector breakdowns dated 31 August 2026. Weights are rounded and will change over time.
Combined financials, materials and energy weights were 69.8% on the TSX and 17.6% in the S&P 500. The figures give both indexes distinct sensitivities to interest rates, commodity prices and corporate earnings, even though individual share movements also matter.
Why do Canadian banks carry so much weight?
Canada’s large financial institutions occupy prominent positions in its public equity market. Royal Bank of Canada, Toronto-Dominion Bank, Bank of Montreal, Bank of Nova Scotia and Canadian Imperial Bank of Commerce were among the TSX Composite’s ten largest constituents in the August 2026 snapshot.
That gives developments in lending, deposits, credit losses and bank profitability considerable influence. Higher interest rates do not automatically help bank shares: funding costs, loan demand, competitive pressure and provisions for expected credit losses can move in different directions. A poor quarter at several large lenders can weigh on the benchmark even if smaller companies perform well.
Why does technology have such a large influence on the S&P 500?
The S&P 500’s technology weight reflects the large public market values of major US businesses. Nvidia, Apple and Microsoft appeared among its largest constituents in the August 2026 index snapshot, making developments in semiconductors, computing and software especially relevant.
Some technology-related businesses sit in other formal sectors. Amazon is classified in Consumer Discretionary, while Alphabet and Meta belong to Communication Services. A movement affecting large digital businesses may therefore influence several reported sectors at once. The headline index can rise strongly even if the rally is concentrated in a relatively small group of its largest securities.
Does having more companies mean better diversification?
Not necessarily. The number of constituent companies is one measure of breadth, but the allocation to the largest holdings matters just as much. Market-cap weighting means a few very large companies can account for a meaningful share of index returns.
There is also concentration by economic activity. Canada’s largest holdings include banks, energy producers and a gold miner; the largest US holdings are weighted more heavily toward technology-related businesses. Two benchmarks can be similarly concentrated by company size yet exposed to different events. Owning both broadens the company and sector mix, but does not eliminate the possibility that equity markets decline together.
How does market-cap weighting change index returns?
Float-adjusted market-cap weighting gives larger publicly traded companies more influence. An equal percentage move by two constituents does not have an equal effect on the index unless their index weights happen to match.
Take an intentionally simplified index containing a C$90-billion company and a C$10-billion company, assuming those figures are their entire float-adjusted market values. The first represents 90% of the index and the second 10%. If only the larger company’s share price rises 5%, the index rises approximately 4.5%, ignoring any other adjustments.
Real benchmarks use many more securities, ongoing constituent reviews and divisor adjustments to handle corporate actions. Our related guide explains how stock indices are calculated, including how market-cap weighting compares with price-weighted and equal-weighted methods.
Why do oil and gold matter more to the TSX?
Energy and materials have a far larger combined weight in the Canadian benchmark, so changes in oil, gold and other commodity markets can have a greater direct effect on its performance. That influence works through companies’ earnings expectations rather than through commodity prices alone.
For example, higher crude prices may benefit an oil producer’s revenue outlook but can also raise costs for other businesses. A gold miner can lag a rising gold price if production disappoints or operating costs increase. Pipeline companies can have yet another sensitivity to volumes and contracts. The sector mix explains why commodities matter; company-specific economics explain why not every stock moves together.
How does the Canadian dollar change an S&P 500 return?
Canadian-dollar results on unhedged US equities reflect both stock performance and the USD/CAD exchange rate. A stronger loonie reduces the Canadian-dollar value of a given US-dollar holding, while a weaker loonie increases it, assuming the US-dollar price is unchanged.
Imagine an investment worth US$10,000 when USD/CAD is 1.40: its Canadian-dollar equivalent is C$14,000. It then gains 10% to US$11,000, but the loonie strengthens and USD/CAD falls to 1.30. Its Canadian-dollar value becomes C$14,300, a return of about 2.1%, rather than 10%, before costs.
| Measure | Starting | Ending |
| Investment in USD | US$10,000 | US$11,000 |
| USD/CAD | 1.40 | 1.30 |
| CAD equivalent | C$14,000 | C$14,300 |
| Return | — | 10% USD; about 2.1% CAD |
Hypothetical values only. Excludes dividends, fees and taxes. The Bank of Canada publishes indicative exchange rates, not guaranteed transaction prices.
A Canadian-listed S&P 500 fund is not necessarily currency-hedged merely because it trades in Canadian dollars. Whether USD/CAD affects its results depends on the underlying assets and the fund’s hedging policy. A currency-hedged fund seeks to reduce exchange-rate effects but introduces its own costs and tracking differences.
Can you compare the indexes using their quoted levels?
No. The absolute level of an index reflects its calculation history and divisor, not the affordability of the companies it contains. Comparing percentage returns over the same dates is more meaningful than comparing the numbers displayed beside their names.
The return convention matters too. Price-return indexes track constituent price movements, while total-return indexes incorporate dividends under the applicable methodology. Comparing a total-return version of the TSX with a price-return version of the S&P 500 would mix different measures. A Canadian-dollar comparison also requires consistent currency treatment.
Are these indexes the same as the products used to trade them?
No. An index is a calculated benchmark, not an asset that can be purchased directly. Investors and traders obtain exposure through vehicles such as ETFs, futures and, where permitted, derivatives including CFDs. Costs and risks depend on the instrument, not just the benchmark.
An ETF can have fund expenses and tracking differences. Futures have expiry and margin arrangements. A leveraged index CFD may involve spreads, overnight financing and liquidation rules. Before evaluating a particular instrument, review its tracking method, currency exposure and applicable contract conditions.
If account features are relevant to that comparison, examine the published NumanCap account types and their documented terms rather than assuming all accounts offer the same instruments or protections.
What should a Canadian reader take from the comparison?
The two indexes provide different windows onto North American business activity. Canada’s benchmark is more exposed to banks and resource producers; the American benchmark is much more heavily weighted toward technology. Those exposures change over time, which is why the observation date matters whenever a sector breakdown is cited.
For Canadians, currency completes the analysis. An attractive-looking US-dollar return can become a very different Canadian-dollar return after exchange-rate changes. The benchmark and the investment product should both be understood before drawing conclusions from a chart.
For an overview of the markets and instruments covered on the site, see NumanCap trading services. The relevant product disclosures determine what a specific position actually tracks and what risks and costs apply.
Frequently asked questions
What is the biggest difference between the TSX and S&P 500?
Their sector composition is fundamentally different. In August 2026, financials, materials and energy made up almost 70% of the TSX Composite, while Information Technology represented 37.9% of the S&P 500. Both use float-adjusted market-cap weighting, but their different companies and industries give them different sensitivities to economic events.
Why can the TSX rise when the S&P 500 falls?
The indexes weight industries differently. Strong bank, mining or energy shares can lift Canada’s benchmark while weakness in major US technology stocks weighs on the S&P 500. The reverse can happen too. If a Canadian investor is comparing investment returns rather than index levels, USD/CAD movements can create an additional difference.
Does a Canadian-listed S&P 500 ETF eliminate currency risk?
Not automatically. A Canadian-dollar trading price does not mean the underlying US holdings are hedged. An unhedged fund is affected by changes in USD/CAD; a hedged fund seeks to reduce that effect but may incur hedging costs and tracking differences. Check the fund’s stated currency policy rather than inferring it from the trading currency.
Does the TSX Composite include smaller companies?
The TSX Composite is a broader Canadian market benchmark than the S&P/TSX 60, although it still applies eligibility and liquidity requirements. The S&P/TSX 60 is its large-cap subset, while other indexes cover smaller or otherwise excluded securities. Inclusion in a country’s headline benchmark should not be confused with coverage of every listed company.
Should index comparisons include dividends?
They should use the same return convention. Price-return series exclude ordinary dividends from index returns, while total-return series incorporate them according to the index methodology. Using different versions can distort a historical comparison. Currency, dates, fees and tracking differences also matter when translating index performance into an investor’s actual experience.
This article is for general educational purposes only and is not financial, investment, tax or legal advice. Index composition and historical performance do not predict future results. Numerical scenarios are hypothetical unless a dated source is given. Index-linked financial products differ in cost and risk, and leveraged trading can cause rapid losses. Product availability and applicable protections vary by jurisdiction.
