S&P Dow Jones Indices, the company that owns and manages the S&P 500 Index, is adding two high-flying stocks to the index.
The move will give more weight to its technology and consumer discretionary sectors and less to its industrial and financial sectors.
The decision, effective on March 18, will swap one of the hottest techs stocks into the index along with a popular shoe vendor that has lately been, an investor darling.
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A stock with Nvidia-esque gains
Going into the S&P 500:
Super Micro makes high-end servers used in artificial intelligence applications. Its shares are up a whopping 218.5% this year as of Friday, after soaring 1,003% in 2023.
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The shares are benefitting from the emergence of artificial intelligence as perhaps the most powerful influence on computing since the World Wide Web became a thing.
The investor interest in AI has made Nvidia (NVDA) the third most valuable U.S. stock and boosted share prices in other chip and equipment makers used in AI operations.
Thanks to blowout fourth-quarter earnings, Nvidia shares are up 66.2% this year after rising 239% in 2023.
Deckers makes footwear and accessories for the growing outdoor enthusiast market. The Goleta, Calif.-based company’s shares are up 35.1% this year after rising 67.5% in 2023.
The S&P 500’s information technology sector represented 29.8% of the value of the stocks in the S&P 500 at the end of February.
Consumer discretionary shares were 10.6% of the index as of Feb. 29.
Super Micro and Deckers will replace two longtime S&P 500 members. These will become components of the S&P Midcap 400 Index:
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Appliance maker Whirlpool Corp. (WHR) , founded in 1911.
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Regional banking company Zions Bancorp (ZION) , founded in 1873.
S&P Dow Jones regularly adds and subtracts members of its indexes if a company merges with another or goes broke.
It also adjusts the indexes for existing market conditions and, in this case, the reality of what it calls “the large-cap market space.”
The S&P 500 is a market-cap-weighted index. The bigger the market capitalization, the more influence a stock has on the index.
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This explains what S&P means: Super Micro’s market cap alone is $50.6 billion.
That’s 4.4 times larger than the combined market caps of Whirlpool and Zion — which is about $11.5 billion.
Companies with venerable histories
Whirlpool is a global manufacturer of household appliances.
For many years, the company was the primary supplier of appliances to Sears, Roebuck & Co. before establishing its brand. It now offers products under many brand names, including Maytag, KitchenAid, JennAir, and Amana.
The shares are off 12.3% this year after falling nearly 14% in 2023.
Zions Bancorp was founded as an arm of the Church of Jesus Christ of Latter-Day Saints. Brigham Young was the first president of the then-Zion’s Savings Bank & Trust Co.
The church severed its ties in 1960. The banking company now has $87.2 billion in assets and operates in 11 western states, including Utah, California, and Arizona.
Starting in 2023, the bank’s shares have suffered along with many regional banks because of concerns over problem loans, especially real loans.
Shares are down 11.6% this year after dropping 10.8% in 2023.
In addition to the S&P 500 changes, S&P Dow Jones added software maker Intuit (INTU) to the S&P 100 Index, replacing Exelon (EXC) , the biggest U.S. utility company by revenue. Exelon is still a part of the S&P 500
The moves by S&P Dow affects its main indexes: the S&P 500, the S&P 100, the S&P 400 Index and the S&P Smallcap Index.
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