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S&P 500 Adds Bloom Energy, Illumina, and Pure Storage in Quarterly Rebalance
Bloom Energy Corp. (BE), Illumina Inc. (ILMN), and Pure Storage Inc. (PSTG) are set to join the S&P 500 index, S&P Dow Jones Indices announced Friday as part of its latest quarterly rebalancing. The three firms will replace Molson Coors Beverage Co. (TAP), The Trade Desk Inc. (TTD), and Builders FirstSource Inc. (BLDR).
Index Changes and Market Reaction
The changes will take effect prior to the open of trading on September 21, according to the index provider. Inclusion in the benchmark index typically forces large index-tracking funds to purchase shares of the newly added companies, often leading to a positive stock reaction.
Following the announcement, the new entrants saw gains in after-hours trading:
- Bloom Energy (BE) shares rose by 6%.
- Illumina (ILMN) shares climbed 1.7%.
- Pure Storage (PSTG) shares were up 2.2%.
Drivers Behind the New Entrants
AdThe additions reflect the strong recent performance of the three companies. Bloom Energy, a fuel cell manufacturer, has benefited from soaring power demand from data centers supporting artificial intelligence. In July, the company reported earnings that more than doubled expectations and raised its full-year guidance for the second consecutive quarter.
Similarly, life sciences company Illumina raised its full-year revenue forecast above analyst estimates in its July report. Pure Storage, a computer storage provider, also recently announced financial results that surpassed market expectations.
Context for Investors
Inclusion in the S&P 500 is a significant milestone, driven by the growth of passive investing. To be eligible, companies must meet specific criteria for market capitalization, profitability, liquidity, and public float. According to guidance from July, a company needed a market cap of at least $22.7 billion to be considered.
This rebalancing follows a non-cyclical adjustment in August when Reddit Inc. (RDDT) was added to the index, replacing AvalonBay Communities Inc. (AVB).
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