What is the S&P 500 and why does inclusion matter?

The S&P 500 is a stock market index that tracks 500 of the largest publicly traded companies in the US. When a company joins this prestigious index, it often sees increased buying pressure because index funds and ETFs must purchase shares to match the benchmark, potentially driving up the stock price.

What criteria do companies need to meet for S&P 500 inclusion?

Companies must meet strict requirements including substantial market capitalisation (typically over $15 billion), consistent profitability over recent quarters, adequate liquidity, and being domiciled in the US. They must also represent their sector well and have a significant portion of shares available for public trading.

How do index funds affect stock prices when companies join the S&P 500?

Index funds and ETFs that track the S&P 500 must buy shares of newly added companies to maintain their benchmark allocation. This creates immediate buying pressure as billions of pounds flow into these stocks, often resulting in price increases around the announcement and inclusion dates.

What does 'market capitalisation' mean?

Market capitalisation (or market cap) is the total value of a company's shares in the stock market. It's calculated by multiplying the current share price by the total number of shares outstanding. Larger market caps generally indicate more established, stable companies.

Are these stocks guaranteed to join the S&P 500?

No, there are no guarantees. These companies meet many of the criteria for potential inclusion, but the S&P committee makes final decisions based on various factors including market conditions, sector representation, and company fundamentals. This theme represents potential opportunities, not certainties.

15 handpicked stocks

S&P 500 Contenders | Index Addition Candidates

S&P Dow Jones Indices announced the addition of AppLovin, Robinhood, and Emcor to the prestigious S&P 500 index. This theme focuses on companies that are strong contenders to be added to the index in the future, potentially benefiting from the increased visibility and demand that inclusion brings.

Han Tan | Market Analyst

Updated 1 day ago | Published at September 8