By Andrew Bary
What stocks are next in line for the S&P 500? Speculation began soon after S&P Dow Jones Indices said on Sept. 6 that Dell Technologies, Palantir Technologies, and Erie Indemnity would join on Sept. 23. Getting in can mean a pop in the stock as investors buy ahead of index-fund purchases. Dell and Palantir both rose over 10% last week.
S&P adds companies once they meet its profitability criteria. Dell and Palantir were two of the largest companies not in the S&P 500, with $72 billion and $68 billion market caps, respectively. Workday ($67 billion) and Apollo Global Management ($61 billion) could be next. Workday is a leading software provider, Apollo a big alternative asset manager, like KKR and Blackstone, and insurer and annuity provider. Blackstone joined in 2023; KKR in July.
Marvell Technology ($57 billion) may take longer. S&P requires generally accepted accounting principles, or GAAP, cumulative profits over the most recent four quarters and during the latest quarter. The chip maker, like many tech companies, is profitable based on non-GAAP earnings that add back stock compensation to earnings, but not on a GAAP basis, which treats stock comp as an expense.
Coinbase Global, Trade Desk, and Ferguson Enterprises are also candidates. S&P requires additions to the S&P 500 be domiciled in the U.S., with market values of at least $18 billion. Plumbing distributor Ferguson moved to the U.S. a month ago from the U.K. It's on the list.
Write to Andrew Bary at andrew.bary@barrons.com
Last Week
Markets
As the week began, Nvidia rose after a selloff and oil sank below $70 a barrel. Mexico passed a law to elect judges, sending the peso reeling. U.S. August consumer and producer prices were up 0.2%; inflation slowed to 2.5%. Stocks rallied on the week, with the Dow Jones Industrial Average up 2.6%; the S&P 500, 4%; and the Nasdaq Composite, 6%. Interest-rate cuts ahead.
Companies
Apple introduced its AI-enhanced iPhone 16s but lost a European Union case over $14 billion in Irish back taxes. Alphabet's second antitrust trial opened in Virginia, targeting its online ad business; the European Commission upheld a $2.7 billion antitrust fine against Google. S&P Global said Palantir Technologies, Dell Technologies, and Erie Indemnity will join the S&P 500. Out are American Airlines, Etsy, and Bio-Rad Laboratories. Boeing and union leaders agreed to a new contract, but 30,000 workers voted to strike. The Federal Reserve scaled back a bank capital hike from 19% to 9%. Trump Media & Technology Group fell 11% after the Harris-Trump debate, then bounced 12% on Friday.
Deals
Home-goods discounter Big Lots filed for bankruptcy; private-equity firm Nexus Capital is a stalking-horse bidder...Japan named Seven & i a "core" company, a defense against Alimentation Couche-Tard's takeover bid...Italy's UniCredit acquired 9% of Germany's Commerzbank... Sirius XM combined with its Liberty tracking stock, with Berkshire Hathaway holding 25% of the shares.
Next Week
Tuesday 9/17
The Census Bureau reports retail and food services sales for August. Consensus estimate is for retail sales to be flat month over month, after a healthy 1% gain in July. Excluding autos, sales are expected to increase 0.4%, matching the July rise.
Wednesday 9/18
The Federal Open Market Committee announces its monetary-policy decision. The FOMC is all but certain to cut the federal-funds rate, currently at a multidecade high of 5.25%-5.50%, for the first time since the onset of the pandemic in March 2020. The futures market is pricing in a 50% chance of a quarter-point rate cut and a 50% chance of a half-point cut. Traders are expecting more than a full percentage point worth of rate cuts by year end, implying at least one half-point cut at one of the three remaining FOMC meetings this year.
Thursday 9/19
The National Association of Realtors reports existing-home sales for August. Economists forecast a seasonally adjusted annual rate of 3.9 million homes sold, roughly even with the July data. Existing-home sales are hovering near their lowest levels since the 2008-09 financial crisis as high mortgage rates price some buyers out of the market and lock in would-be sellers who purchased at much lower rates.
The Numbers
1.8%
Fall in China's producer price index in August year over year, continuing 23 straight months of deflation.
98.6 K
Births in Russia in June, the first time under 100,000, in a first half with the lowest number of births since 1999.
$81 K
Median U.S. household income in 2023, up 4% from 2022, the first rise since the pandemic began.
100 T
Amount of data in megabytes transmitted over cellular phone networks in 2023, roughly double 2021.
Write to Robert Teitelman at bob.teitelman@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
September 13, 2024 19:57 ET (23:57 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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