The stock market is getting a big makeover today that could lead to a frenzied trading day, especially just before closing bell.
Index provider FTSE Russell is reshuffling its U.S. stock benchmarks, adding names that have turned into stars and deleting those that are shining less bright. The annual June overhaul takes place after the regular trading session ends.
For the first time since 2019, the five largest companies in the Russell 3000 and Russell 1000 indexes are shifting. Tesla TSLA –0.43% (ticker: TSLA ) is leaping over Meta Platforms META +1.86% ( META ) to claim its spot as the fifth-largest company. Apple AAPL +2.16% ( AAPL ) and Microsoft MSFT +2.26% ( MSFT ) will stay No. 1 and No. 2, respectively. Alphabet GOOGL +0.68% ( GOOGL ) is replacing Amazon.com ( AMZN ) for third largest.
Tesla’s higher ranking in the Russell 1000 will most likely make the stock a net buy for investors who want to mirror the index, said Timothy Anderson, managing director at TJM Investments.
And because the Russell 1000 is a capitalization-weighted index, it’s not surprising that stocks that have significantly fallen in price, such as Meta, will be rated lower, he added.
New on the list of the 10 largest companies are UnitedHealth Group ( UNH ) and Nvidia ( NVDA ), ranking eighth and ninth, respectively.
There will be another big shift for Meta along with Netflix ( NFLX ) and PayPal Holdings . The three will transfer most of their weight to the Russell 1000 Value Index and their weight in the Russell 1000 Growth Index will lessen. GameStop ( GME ) will shift fully to the Value Index.
“As of the 2022 annual Russell Reconstitution, all three Russell Style variables indicated that all four companies were relatively Value-oriented compared to other stocks in the Russell 1000,” said Catherine Yoshimoto, FTSE Russell’s director of product management.
Many energy stocks are moving up to the Russell 1000 index from the Russell 2000 index. Examples are Antero Resources ( AR ), Chesapeake Energy ( CHK ), Ovintiv ( OVV ), PDC Energy ( PDCE ), Range Resources ( RRC ), and Southwestern Energy ( SWN ).
“With the backdrop of heightened market volatility and inflation fears, Energy is this year’s standout industry, leading the other industries in terms of index performance and the number of companies graduating from the Russell 2000 index to the Russell 1000 index,” said Catherine.
With approximately $12 trillion in investor assets benchmarked to or invested in products based on the Russell U.S. indexes, the reconstitution traditionally concludes with one of the highest trading volume days of the year, FTSE Russell said.