The S&P 500 is
inversely price sensitive, as a capitalization-weighted index. Normally you want to buy low and sell high. An S&P500 index fund buys more of high-priced stocks and sells the low-priced ones, by definition. The highest market caps are the stocks with the highest prices (adjusted for number of shares outstanding, of course).
For most ordinary investors, this doesn't really matter, because you put your money into your retirement fund every month and you only take it out at retirement. But if you're looking at the short term, it absolutely matters. I've heard S&P 500 indexing referred to as a momentum investment strategy: it buys stocks whose prices are going up, on the theory that they will go up more in the future. And there's an element of a self-fulfilling prophecy to that, since if everybody else is investing in the index fund, they also will be buying those same stocks, which will cause them to go up even more in the future.
If you want something that buys shares based on each company's relative performance, you want a fundamental-weighted index. I've looked into that and I found a few revenue-weighted index funds, but couldn't find a single earnings-weighted index fund, which is what I actually want. Recommendations wanted; IMHO the S&P 500 is way overvalued on fundamentals and heavily exposed to certain fairly bubbly stocks (the Mag-7 alone make up 35% of your index fund, and one of them is my employer, and all of them employ heavily in my geographic area and are pushing up my home value), so I've been looking for a way to diversify into companies that actually have solid earnings.