LIVE MARKETS-What to expect from S&P 500's quarterly rebalancing due later this week
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WHAT TO EXPECT FROM S&P 500'S QUARTERLY REBALANCING DUE LATER THIS WEEK
The S&P 500's first-quarter rebalancing is right around the corner and investors will be focused on any new players introduced into the U.S. benchmark when the results of its quarterly tweak are announced after market close on Friday.
Stephens analyst Melissa Roberts estimates that at least 36 changes could be seen across the broader S&P 1500 index universe and laid down several companies which are eligible to either migrate from the S&P 400 midcap index .IDX to the premiere S&P 500 .SPX or could be outside inclusions.
Among the outsiders, Roberts' top picks are photonic products maker Lumentum Holdings LITE.O and Alnylam Pharmaceuticals ALNY.O.
Those eligible for a migration to the top index include optical devices maker Coherent COHR.N, data center equipment maker Vertiv VRT.N, social media platform Reddit RDDT.N and health care tech maker Veeva Systems VEEV.N.
On a sector level, Roberts estimates that information technology, communication services and real estate are the most likely sectors to see new additions, based on their current weighting and M&A activity.
However, analysts warned that changes to the index members are not actively done unless changes are warranted, in the case of a member being acquired, or simply at the Index Committee's discretion.
From a flows perspective, J.P.Morgan analysts estimates that the total trade size of the S&P 500 rebalance could be $28.8 billion with a two-way turnover of 0.39%.
The largest weight increases are expected in Amazon.com AMZN.O, Alphabet GOOGL.O, Intel INTC.O, Broadcom AVGO.O and Meta Platforms META.O, while the largest weight decreases are expected in Apple AAPL.O, JPMorgan Chase JPM.N, S&P Global SPGI.N, Salesforce CRM.N and Mastercard MA.N.
With respect to sectors, communication services and consumer discretionary are expected to see the largest inflows, while industrials and consumer staples are slated for the largest outflows.
(Shashwat Chauhan)
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