Think you know the world's most-popular index: The S&P 500? It's very different from what it was just nine years ago — and more changes are coming.
Nearly 180 stocks in the S&P 500, or roughly a third of the index, have been replaced since 2015, says data from S&P Dow Jones Indices. Such turnover reflects of just how fast-changing the economy is and how much the index is modified to keep up. The latest changes kicked in Monday with the addition of Blackstone and Airbnb to replace Lincoln National and Newell Brands. They're the ninth changes to the S&P 500 — just this year.
It's also a reminder that the S&P 500 you're buying now is reinvented from the one you bought just nine years ago. And more changes are to come.
"Perhaps more demotions of low-market-cap financials are to come," wrote Wells Fargo analyst Finian O'Shea in a report Tuesday.
S&P 500 Changes Matter To Investors
This week's turnover in the S&P 500 highlights how changes matter to investors.
Shares of Blackstone and Airbnb jumped 3.6% and 7.2%, respectively on Monday following their addition to the S&P 500. For both, joining the big-cap benchmark used by most investors adds pedigree. Both stocks grew so fast they weren't even in the S&P MidCap 400 or S&P SmallCap 600 indexes yet. Jumping into the S&P 500 all of a sudden is like enlisting in the Big Leagues without playing in the Minors first.
And these new additions fit the pattern of investor reaction. The nine S&P 500 stocks added this year — that traded all year — jumped an average of 32% in 2023 so far.
Seeing new S&P 500 companies spring up has been surprisingly common this year, too. Kenvue, the latest addition to the S&P 500 this year in August, is a new spinoff from S&P 500 company Johnson & Johnson. Meanwhile, Palo Alto Networks, Bunge and Insulet, joined the S&P 500 this year without first appearing in the S&P MidCap 400 or S&P SmallCap 600 indexes.
More S&P 500 Change To Come?
Just as the U.S. economy evolves, so too does the S&P 500. Typically, the S&P 500 makes roughly 20 changes in a year. Last year, for instance, 15 changes were made to the S&P 500.
Companies with market values on the low side for a big-cap index start looking suspect for removal. As of the end of August, seven S&P 500 companies sported market values of $6 billion or less. And two of them were just removed Newell Brands and Lincoln National.
Some companies, too, are removed after being bought like Abiomed was in 2022.
If there's one thing for certain about the S&P 500 — it's that it will likely look very different in 10 years than it does now.
This Year's S&P 500 Changes
| Action | Effective after | Symbol | Company | Sector |
|---|---|---|---|---|
| ADD | 9/15/2023 | Blackstone | Financials | |
| ADD | 9/15/2023 | Airbnb | Consumer Discretionary | |
| DELETE | 9/15/2023 | Lincoln National | Financials | |
| DELETE | 9/15/2023 | Newell Brands | Consumer Discretionary | |
| ADD | 8/24/2023 | Kenvue | Consumer Staples | |
| DELETE | 8/24/2023 | Advance Auto Parts | Consumer Discretionary | |
| ADD | 6/16/2023 | Palo Alto Networks | Information Technology | |
| DELETE | 6/16/2023 | DISH Network | Communication Services | |
| ADD | 5/3/2023 | Axon Enterprise | Industrials | |
| DELETE | 5/3/2023 | First Republic Bank | Financials | |
| ADD | 3/17/2023 | Fair Isaac | Information Technology | |
| DELETE | 3/17/2023 | Lumen Technologies | Communication Services | |
| ADD | 3/14/2023 | Bunge Limited | Consumer Staples | |
| DELETE | 3/14/2023 | Signature Bank | Financials | |
| ADD | 3/14/2023 | Insulet | Health Care | |
| DELETE | 3/14/2023 | SVB Financial Group | Financials | |
| ADD | 1/3/2023 | GE HealthCare Technologies | Health Care | |
| DELETE | 1/3/2023 | Vornado Realty Trust | Real Estate |
