A “special rebalance” of the Nasdaq 100 index will take place later this month as exchange operator Nasdaq looks to reduce the concentration of heavyweight companies that account for nearly half of the index’s weight.
“There is some concern that this handful of names is distorting the health of the overall stock market, which is likely what’s spurring the special rebalancing,” said Art Hogan, chief market strategist at B Riley Wealth. Microsoft has the largest weight at 12.91 per cent, followed by Apple at 12.47 per cent, Nvidia 7.04 per cent, Amazon 6.89 per cent and Tesla 4.50 per cent, according to Refinitiv data.
An S&P spokesperson said that they “do not typically comment on other index providers’ actions and potential changes to our indices.”Wells Fargo index strategists estimate Starbucks, Mondelez, Booking Holdings, Gilead Sciences, Intuitive Surgical, Analog Devices and Automatic Data Processing will see their weight increase in the Nasdaq 100 index.
“It will require portfolio managers to add to their positions in these companies, which will boost their share prices.”Apple, which touched $3-trillion in market capitalization late last month, fell 1 per cent on Monday following the news. Other megacap stocks including Microsoft, Alphabet and Amazon fell between 0.7 per cent and 2.5 per cent.