Financial Guide for Newcomers in Stocks and Bonds Market on September 19
The S&P 500 index is set for a rebalance on September 22, with several companies joining and others leaving the prestigious index. This rebalance may cause temporary price fluctuations for the affected companies.
Among the new additions to the S&P 500 are MarketAxess Holdings (MKTX), Enphase Energy (ENPH), AppLovin, Robinhood Markets, and Emcor Group. Their inclusion in the index is expected to trigger a potential price increase for these companies.
On the other hand, Caesars Entertainment (CZR) will exit the S&P 500, which may lead to a temporary price decline for the company.
The Federal Reserve has projected two additional finance cuts this year, but the details of these cuts remain unspecified. As for the year-end federal funds rate, it is projected to be within a range of 3.5% to 4%.
In the stock market today, the Nasdaq Composite rose by 0.9%, while the Dow Jones Industrial Average, focused on blue-chip stocks, saw a 0.3% increase. The large-cap S&P 500 index rose by 0.5%.
Rebalancing, the process of restoring a targeted allocation within an investment account, is a common practice due to equity holdings appreciating while debt holdings do not. In down markets, gradual rebalancing can help avoid realizing losses. If the math doesn't work for a quick rebalance, moving gradually may be necessary, especially if the broker does not support fractional shares.
In other news, Nvidia announced a $5 billion investment in Intel, pending regulatory approval. However, this investment will not involve Intel's chip foundry producing chips for Nvidia. This transaction may create risks for competing U.S. finance companies AMD and Broadcom, and possibly for Taiwan Semiconductor.
As always, portfolios can drift away from targeted allocations, and rebalancing can create temporary or lingering price changes for the affected companies, depending on their financial health and business outlook. Future additions to the S&P 500 beyond AppLovin, Robinhood Markets, and Emcor Group are not publicly confirmed and depend on company performance and index committee decisions.
