Lululemon Athletica’s stock was surging Monday as investors rallied behind the news that it would soon join the S&P 500.
Shares of Lululemon, the exercise apparel company, were gaining 9.2% to $412.50 on Monday. The S&P 500 was up 0.8%. Because there are certain criteria that companies need to meet to join—and remain—in the S&P 500, it’s common for their stocks to cycle in and out. That has accelerated as newer companies—especially in the tech space—have grown at a fast clip. In the late 1970s, the companies in the S&P 500 had an average tenure of about 35 years, according to a McKinsey study. By 2019, the average tenure was closer to 20 years, the firm found, as younger companies outperformed more established players.
Early studies found that index inclusion led to a permanent increase in a companies’ market value and stock price—something reflected in Monday’s share performance.
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