These stocks could join the S&P 500 this month, Bank of America says

CNBC

3 days ago

Fund managers are gearing up for at least one more big reshuffling before their summer vacations, with the second-quarter changes to the S & P 500 expected to be unveiled at the end of this week. Craig Siegenthaler, research analyst at Bank of America, said in a Tuesday note to clients that there are several financial services stocks that could get a boost from the upcoming rebalance. "We view [ Robinhood ] as a prime candidate for the S & P 500 with the next rebalancing. … We view [ Interactive Brokers ] as a top migration candidate from the S & P 400 due to its size, as well as the S & P 500 being underweight financials and the S & P 400 being overweight financials," Siegenthaler said. HOOD YTD mountain Robinhood's stock has been a stronger performer in 2025 but is not yet part of the S & P 500. Other candidates for potential inclusion include Ares Management , Flutter Entertainment and Cheniere Energy , the note said, with Invesco a stock that could potentially get bumped down from the large-cap 500 to the mid-cap S & P 400. Even modest changes to indexes can spark billions of dollars of trading around the rebalance date, which typically comes on the third Friday of the last month in a quarter. Passive funds must swap out their old positions for new ones, and active managers often do so as well to keep their desired distance from the index in check. The S & P 500 rebalance is particularly impactful, as the SPDR S & P 500 Trust ETF (SPY) alone has $600 billion in assets. Companies being added to the index can generally expect funds like that to scoop up huge amounts of their shares in the coming weeks. "For HOOD or ARES, which aren't a part of the S & P 400, we would expect significant buying activity from passive funds (17% gross/12% net of their floats)," Siegenthaler said. The S & P 500 is not simply a ranking of the 500 largest stocks in the U.S. There are eligibility requirements around a stock's liquidity and the underlying company's profits, for example. Timing also matters, and tech firm Okta may be an example of that this cycle following its postearnings report sell-off last week. "What was a nearly $22bn company a week ago now weighs in at $18bn. At the moment, there are six S & P 400 members ahead of it and one — US Foods — that is nipping at its heels," analyst Don Bilson of Gordon Haskett said about Okta in a note to clients on Tuesday. — CNBC's Michael Bloom contributed reporting.