Latest news with #S&P500Trust
CNBC
5 days ago
- Business
- CNBC
These stocks could join the S&P 500 this month, Bank of America says
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.
Yahoo
5 days ago
- Business
- Yahoo
Wall Street Games Out How to Profit From Trump Tariff Flip-Flops
(Bloomberg) -- As trade worries bubble up once again in US markets, some on Wall Street are gaming out how to take advantage of the wild tariff-related selloffs and rallies that have defined the first five months of 2025. Where the Wild Children's Museums Are Billionaire Steve Cohen Wants NY to Expand Taxpayer-Backed Ferry The Economic Benefits of Paying Workers to Move At London's New Design Museum, Visitors Get Hands-On Access LA City Council Passes Budget That Trims Police, Fire Spending A study by Nomura strategist Charlie McElligott published last week showed that betting against S&P 500 futures every time President Donald Trump escalated trade rhetoric and buying them five days later would have yielded 12% since the beginning of February. By contrast, simply holding the benchmark index would have left an investor virtually flat in that period — after a series of stomach-churning stock swings. Other investors have worked out similar plays, based on the notion that the pattern of escalation and resolution that has thus far characterized the trade war will continue. Those theories may be put to the test soon enough. With the S&P 500 coming off a searing rally, Trump is rattling the tariff saber once again: A 50% increase in steel and aluminum levies announced last week is set to take effect on Wednesday, while the US and China have traded accusations that each has violated the terms of last month's broad agreement that saw both sides reduce tariffs from astronomical highs. The S&P 500 'is probably at the top end of its range,' said Gareth Ryan, founder and managing director of investment firm IUR Capital, who has taken bearish positions on the SPDR S&P 500 Trust exchange-traded fund as trade tensions between the US and China recently heated up. The pattern is that 'you get really bad tariff headlines, the headlines get walked back and that kind of brings vol back in,' he said. Stocks swept into the year on a wave of optimism sparked by hopes that a second Trump presidency would stoke growth by easing regulations and cutting taxes, taking the S&P 500 to an all-time high in February. But signs that Trump intended to first tackle tariffs — another key part of his policy platform — quickly cooled investors' fervor. By mid-March, the index was in a correction, often defined as a fall of 10% or more from its high, after Trump announced tariffs on Mexico, Canada and China. Stocks bounced after Trump paused or mitigated some of those levies, but the rebound would be short-lived: Trump's April 2 tariff announcement against virtually all US trading partners would take the benchmark index to the brink of a bear market. Steely-nerved traders who dove in at that time were rewarded with a 20% rally to current levels on signs that the final levies would be less severe than feared. As a result of that rollercoaster ride, investors are now poised to react to any jump in volatility by assuming things will quickly calm, said Stuart Kaiser, head of US equity trading strategy at Citigroup Inc. 'Every time the VIX spikes, we actually see people want to fade it, not chase it,' he said. Of course, there's the possibility that tariff-related market swings will become less severe, as investors become accustomed to tariff rhetoric and turn their attention to other factors. Indeed, the S&P 500 seems to be taking Trump's latest tariff salvos in stride, with the index off some 3.4% from its recent high. That's also visible in the options markets, where bets are not reflecting extremes in either bullish or bearish sentiment at the moment, said Joe Mazzola, head trading & derivatives strategist at Charles Schwab. Trump's tariff announcements don't have 'the same shock value,' he said. 'You're just not seeing those big moves right now.' YouTube Is Swallowing TV Whole, and It's Coming for the Sitcom Millions of Americans Are Obsessed With This Japanese Barbecue Sauce Mark Zuckerberg Loves MAGA Now. Will MAGA Ever Love Him Back? Trump Considers Deporting Migrants to Rwanda After the UK Decides Not To Will Small Business Owners Knock Down Trump's Mighty Tariffs? ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
