(Reuters) – Shares of Apple, Microsoft, and other heavyweight companies experienced a dip on Monday following the announcement by Nasdaq Inc regarding the rebalancing of its Nasdaq 100 index. This move is intended to address the “overconcentration” of the benchmark.
The market capitalization of Apple dropped by 1.1% to $2.967 trillion. Although the company had recently achieved a significant milestone by surpassing the $3 trillion threshold on June 30. Alongside Apple, Alphabet and Amazon also recorded a decline of more than 2%, while Microsoft and Tesla slid by over 1% each.
Nasdaq’s announcement on Friday to conduct a “Special Rebalance” of the index resulted in the drop of Wall Street’s most valuable stocks. The purpose of this rebalance is to address the overconcentration in the index and redistribute the weights accordingly.
The adjustment will be based on the shares outstanding as of July 3, with the changes set to be announced on July 14. These changes will take effect before the market opens on July 24.
The Nasdaq 100 consists of the 100 largest companies traded on the Nasdaq exchange. The alterations to the index will require investment funds tracking it to adjust their portfolios accordingly. This means they will need to sell shares of companies that experience a reduction in weight within the index.
Wall Street’s most valuable companies have been the prominent winners in the U.S. stock market’s recovery this year. Consequently, their weight in the Nasdaq 100, as well as the Nasdaq Composite and S&P 500, has significantly increased.
While the S&P 500 has recorded a 15% gain year to date, Nvidia has experienced a staggering surge of 189%, and Tesla’s value has more than doubled. Furthermore, Microsoft, Amazon, and Apple have all achieved growth ranging from 38% to 51% in 2023.
(Reporting by Noel Randewich; Editing by Richard Chang)
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Credit: The Star : Tech Feed
