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S&P 500 Changes Expected; Wall Street Speculates on Potential Stock Additions



Some Wall Street analysts are predicting potential additions to the S & P 500 index during its quarterly rebalance next month. Inclusion in the index comes with major benefits, as newly incorporated names historically experience an average 7.7% upside on the first trading day. Super Micro Computer and Deckers Outdoor were the most recent additions in March, replacing Whirlpool and Zions Bancorporation. One contender poised for a spot in the index is Block, a payments company that became eligible after reporting positive net income in the fourth quarter of 2023. With the underweighting of financial services in the S & P, analysts believe Block is a likely candidate for inclusion.

Shares of Block have dropped about 8% this year, but analysts see a potential for nearly 40% upside, with a $100 price target. Barclays holds an overweight rating on shares, and Keefe Bruyette & Woods also views a financial services stock as a likely addition to the S & P 500. Analysts believe Square and Coinbase are potential “wild card” entries due to their recent eligibility, with Dell being viewed as the most likely addition given its size. While other candidates like KKR and Apollo Global Management are considered unlikely additions, there’s a “mid to high probability” that Erie resettles in the S & P 500.

Aside from potential changes in the S & P 500, analysts also see potential movements in the S & P Midcap 400 and S & P SmallCap 600 indexes. Ryan Specialty Holdings is seen as a strong contender to join the S & P Midcap 400, while New York Community Bancorp could potentially drop down to the S & P SmallCap 600. Axis Capital Holdings and BOK Financial are also mentioned as potential additions to the S & P SmallCap 600 index. The rebalance is expected to take place after the close on June 21, with changes being announced on June 7.

In conclusion, with the upcoming rebalance of the S & P 500 index, analysts are closely monitoring potential additions and movements within the index. Companies like Block, Square, Coinbase, and Dell are viewed as likely contenders for inclusion due to varying factors such as eligibility, industry representation, and size. While there are other candidates mentioned, the focus remains on the potential changes that could take place in the various S & P indexes, providing opportunities for investors to capitalize on potential upside in the stock market. As the rebalance date approaches, investors will be watching closely for any announcements regarding the inclusion of new names in the S & P 500 index and other related indexes.

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