SAN FRANCISCO (MarketWatch) -- Boosted by upbeat investor reaction to its strong earnings report this week, Apple Inc. has become the second-largest company on the S&P 500 Index in terms of market capitalization, surpassing Microsoft Corp, the publisher of the index said Thursday.

According to Standard & Poor's index services unit, Apple AAPL, +1.50% reached a market cap of $241.5 billion to pass that of Microsoft's MSFT, +1.48% $239.5 billion market capitalization.

Now Apple trails only Exxon Mobil XOM, +0.14% and its market cap of more than $300 billion, S&P said.

The S&P 500 SPX, +0.82% , like many other Standard & Poor's indexes, is float-adjusted. To calculate the index's components by market capitalization, S&P excludes shares not available to public investors - those closely held by "control groups," other companies and government agencies.

Some 87.7% of Microsoft shares are publicly floated, vs. 99.2% for Apple shares, according to FactSet Research.

Using all shares outstanding, Microsoft's market capitalization is still larger than Apple's, S&P acknowledges.

Microsoft took umbrage of its demoted ranking. The company said that using all 8.764 billion shares outstanding, which it valued at $30 a share, would put the company's market cap $262 billion.

"Just because Bill Gates and Steve Ballmer don't trade their shares doesn't mean that the market cap doesn't include them," said Bill Koefoed, general manager for Microsoft investor relations, in emailed comments.

But Standard & Poor's stuck by its ranking.

"Apple is bigger on a float basis, which is what the index is," said S&P senior index analyst Howard Silverblatt in an emailed response to MarketWatch. "I also state that on a full basis, MSFT is still larger," he said.

Earnings inspiration

By any measure, Apple's market cap got a lift this week after the company reported a quarterly profit of $3.07 billion, or $3.33 a share, on revenue of $13.5 billion.

The company's results were helped by sales of 8.75 million iPhones and 2.94 million Macintosh computers during the quarter.

In the two days since Apple's report, the company's share have risen 9% to close Thursday at $266.47. Microsoft shares are up just 3 cents to $31.39 during that time.

After the market closed Thursday, Microsoft reported a fiscal third-quarter profit of $4.01 billion, or 45 cents a share, compared with earnings of $2.98 billion, or 33 cents a share during the same period a year ago. Revenue rose 6% to $14.5 billion. Read more on Microsoft's results.

Microsoft shares sank 3% in after-hours trading following the report.