S & P 500 Shake-up will leave Apple, Tech, with lesser roles
Photograph by Wang Zhao / AFP / Getty Images
Text size
Apple
And technical stocks in general – are becoming less important
S&P 500.
Next week, the S&P Dow Jones indexes will adjust the representation of the 500 companies that make up the market benchmark, a quarterly process known as a rebalancing. Foreign exchange-traded funds and mutual funds that track the S&P 500 will have to adjust their holdings as a result – a process that results in billions of dollars for buying and selling.
The balance will take effect when the market opens on June 24 – Based on market levels from this coming Friday. Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, shared preliminary data on Monday about how shake-up could show up.
On June 14, the total value of information technology in the index was 0.78% lower than on March 15. In the latest rebalancing, Silverblatt says, while the property company value increased by 0.59%.
The figures are based on the value of the shares available for trading – the so-called free float – so both move in prices and share buybacks affect the results.
Technical stock representation in the index was 21,228% down from 21,307% on March 15, based on June 14 data. The real estate portfolio moved to 3.171% from 3.140%.
Apple's (ticker: AAPL) adjusted market value fell by $ 20.9 billion, a 2.42% dip. That would mean a lower representation in the index, although Silverblatt did not give a figure. He was planning to issue stock repurchase data later this week, but he said in a phone interview that Apple has undergone "huge" buybacks.
Apple spent about $ 62.9 billion in buybacks in the first nine months of 2018, more than 10% of the $ 583.4 billion in stock S&P 500 companies bought back together.
An Apple spokesman referred to comments from CFO Luca Maestri during the company's earnings in April. Maestri quoted the management's "trust in Apple's future and the value we look at our stock" when discussing a further $ 75 billion for share buybacks, as well as the latest dividend.
(FB) added $ 3.08 billion in adjusted market value, for a 0.71% change.
Cisco Systems
(CSCO) adjusted value fell by $ 6.64 billion while
Amazon.com
s
(AMZN) grew by $ 1.78 billion, or 0.23%.
Oracle
s
The value fell by about $ 6.48 billion, or 4.77%.
Silverblatt's first quarter buyback was the second highest on record, exceeded only in the fourth quarter of 2018. "There is still a tremendous amount of money the companies spend," he said, noting that the pace of buybacks hit record every quarter last year. "It's like winning the lottery four times in a row, so you come to others."
Asset managers who track S & P 500 under license from the company must buy and sell an additional $ 24.3 billion to adjust their holdings to match the rebalanced index, estimated Silverblatt. It's down from $ 31.6 billion in the first quarter and $ 25.9 billion the year before.
Trading on Friday, the last season before the rebalancing, is likely to be volatile. Future and options for both shares and stock indices are due to expiry, which marks a so-called quadruple hedge day for markets.
Write to Connor Smith at Connor.Smith@barrons.com
