XLK Rebalancing to Reverse Apple, Nvidia Stock Positions

$NVIDIA Corp(NVDA)$  $Technology Select Sector SPDR Fund(XLK)$  $Apple(AAPL)$   

Leaving this here for those unaware about the following news regarding the rebalancing of XLK's basket of holdings. Following news courtesy of Yahoo Finance.

The Technology Select Sector SPDR Fund (XLK), the second-largest technology sector exchange-traded fund by assets under management, will dramatically shift the weighting for two of its top holdings on Friday, assuming the market cap of NVIDIA stays above that of APPLE as of tomorrow, which will likely be the case.

XLK, which has $72 billion in assets under management, will increase its allocation in Nvidia from roughly 5% to more than 20% and drop its allocation of Apple from about 21% to 5%, reversing the stocks' positions in the ETF with Nvidia becoming the second largest holding in XLK's basket.

“XLK will be a forced seller of ~$11 billion worth of $AAPL and a forced buyer of almost $10 billion worth of $NVDA in a rebalance... assuming Nvidia remains larger than Apple at market close on Friday,” Bloomberg research analyst James Seyffart wrote in a post on the social media platform X.

Microsoft will retain the top weighting in the index, State Street Global Advisors, the fund's issuer, confirmed. XLK's rebalancing follows Nvidia's (NVDA) recent market capitalization surpassing Apple's (AAPL). The tech sector fund passively tracks the performance of its benchmark index, the Technology Select Sector Index, which holds a basket of technology companies. The weighting of each company in XLK must reflect their weighting in the index. So XLK must now purchase Nvidia Shares and sell Apple on Friday to mimic their new weightings in the index that the fund tracks.

The price movements might be more prominent in the short term, around the time of the rebalancing, driving the price of NVIDIA higher. In the long run, the stock prices will likely be driven more by the companies' individual performance and overall market conditions. 

Will you Tigers be in for day trades on NVIDIA tml? Will investors start shorting APPL tml?

What do you guys think?

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