Apple, which already dominates the tech index, looks set to do more with an overhaul of sector benchmarks compiled by S&P Global and MSCI, which removes 11 U.S. stocks from the tech index. . .
Ryan Blasterica of Bloomberg News:
Payments companies such as Visa, Mastercard and PayPal Holdings are included in an index that tracks financial companies, while payroll processors such as Paychex and Automatic Data Processing are classified as operating companies.
The exit will reduce the weight of tech companies in the S&P 500 while increasing the influence of the remaining companies in the industry index. Apple and Microsoft already account for 46% of the S&P 500 Information Technology Index, and their share would rise further if Visa and Mastercard were removed. benchmark, accounting for 6.8%.
The increased weightings of Apple and Microsoft mean that investors benchmarked against the tech index have an incentive to hold more of these two stocks to keep up with the index, but the share price is likely to rise in the market. If it begins to fall below , the effect will increase as well.
Apple and Microsoft have outperformed significantly over the past five years, helping to lift the overall market. Both are seen as safe havens, with strong balance sheets and the kind of enduring revenue streams that can withstand slowing economic growth or a recession. The pair outperformed amid the recent fallout from the Silicon Valley Bank collapse.
Apple is up 20% this year and Microsoft is up 17%, compared to the S&P 500 up 2.9% and the Nasdaq 100 index up 15%.
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