Analysts at Keefe, Bruyette & Woods say Rocket Companies and Affirm Holdings could join the S&P 500 as the index reshuffles its membership. KBW gave each a medium probability of being added during the third-quarter rebalancing, whose changes take effect on Sept. 18.
Rocket Companies and Affirm Holdings could be among the next companies added to the S&P 500, analysts at Keefe, Bruyette & Woods told clients, as upcoming index changes open room for new members. The discretionary changes tied to the third-quarter rebalancing will be announced on Sept. 4 and take effect on Sept. 18.
Why a seat is opening
KBW expects nine merger-related changes across the S&P 1500, including one expected vacancy in the S&P 500 that could prompt the index committee to add a new company. The S&P 1500 groups the S&P 500, the S&P Midcap 400 and the S&P Smallcap 600 indexes.
Rocket is now the sixth-largest company eligible for inclusion in the S&P 500 and the largest eligible financial stock, according to the firm. KBW, part of Stifel Financial, gave Rocket a medium probability of joining the benchmark during the third-quarter rebalancing, and a medium- to high likelihood of being added over the next several quarters.
Affirm in the mix
Affirm, a buy now, pay later fintech company, also carries a medium probability of being added during the upcoming rebalancing, KBW said. Inclusion in the benchmark typically boosts demand for shares because index-tracking funds are required to buy newly added companies.
The last reshuffle showed the mechanics. On June 22, Marvell Technology joined the S&P 500, alongside Flex, a contract manufacturer for electronics. The two replaced Pool Corp and Campbell’s Company.
Source: CNBC
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