Four technology and telecommunications companies received major news Friday when S&P Dow Jones Indices announced their inclusion in the prestigious S&P 500 index.
Data center equipment manufacturer Vertiv, photonics specialists Lumentum and Coherent, and telecommunications company EchoStar will all become part of the widely-followed benchmark for large-cap U.S. stocks. The S&P 500 serves as a key indicator tracked by trillions of dollars in index funds and exchange-traded funds, making any membership changes significant events for investors.
Stock markets responded immediately to the announcement, with Vertiv shares climbing nearly 6% in after-hours trading while EchoStar gained approximately 4%. Lumentum and Coherent also posted gains, rising 1.7% and 0.4% respectively following the closing bell.
The strong performance reflects a common pattern where companies joining the index experience stock price increases as fund managers purchase shares to mirror the benchmark’s composition, creating additional demand and trading volume.
These four newcomers will take the places of dating platform Match Group, managed care provider Molina Healthcare, food processing company Lamb Weston, and payroll software developer Paycom. Companies leaving the index typically face downward pressure as the same index-tracking funds sell their holdings to maintain proper portfolio balance.
This trend was evident in after-hours trading, with Paycom dropping 3%, Match Group falling 0.7%, and Molina experiencing a slight decline.
According to S&P Dow Jones Indices, the transition will become official before markets open on March 23 as part of the index’s quarterly rebalancing process.
