It’s no secret that being added to the prestigious S&P 500 is a significant achievement for any company. A recent example of this can be seen with Blackstone, whose stock experienced a notable boost following the announcement.
After the market closed on Friday, S&P Dow Jones Indices revealed that Blackstone would be replacing Lincoln National in the S&P 500 on September 18. This news had been highly anticipated, as back in April, the index provider made a groundbreaking decision to include companies with multiple share classes in its benchmarks. Previously, such companies were excluded from the index. This rule change allowed well-known companies like Alphabet (GOOGL), Berkshire Hathaway (BRK.B), and Meta Platforms (META) to maintain their positions in the index.
On the day of the announcement, Blackstone stock soared by 4.9%. Investors had long speculated that the company would be the next addition to the S&P 500. However, their hopes were momentarily dashed when Axon Enterprise (AXON), the manufacturer of Tasers, took the spot instead in May. And then again in June, Palo Alto Networks (PANW) claimed the coveted position.
But this time, Blackstone finally received the long-awaited call to replace Lincoln National (LNC). Unsurprisingly, the company’s stock immediately responded with a 3.8% increase. This reaction is expected, as every exchange-traded fund or index fund that tracks the S&P 500 will need to purchase Blackstone stock. Additionally, any active manager who uses the index as a benchmark will need to consider including it in their portfolio. Airbnb (ABNB) shares experienced a similar boost of 5% after being chosen to replace Newell Brands (NWL) in the index.
Membership in the S&P 500 is undoubtedly an exclusive club that companies strive to join.
