SP500 Index Changes, for good or bad?

Market Trends - 10/10/2018

This month comes with major changes regarding the SP500 index since 1999. Many industries and sectors will probably rise, and some may even die with their respective importance in the index shifting as well. Moreover, some stocks may go to different sectors. Those adjustments may essentially transform the consumer goods sectors and the IT telecommunications.

Now the importance of the information technology sector probably will drop from the current 25% to 20%. A new sector is expected to be formed, especially the communication services sector, which may hold an important 9 -10% in the popular SP500 index. This new sector will be formed by migrating all titles from the telecommunications industry, which earlier had a weight of 2% in the SP500 index. After this, the telecommunication sector will presumably stop to exist. In extension to that, many IT and consumer goods businesses will be assigned to this new communications services sector.

Among the stock that should complete the emerging communications services industry by moving from the IT sector are EA, Activision, Take-Two Interactive games, Alphabet (Google), Verizon, AT&T the prevailing social networking Facebook, will probably move from the telecommunications sector. From the consumer discretionary sector, Disney, Netflix, 21st Century Fox, and many other companies may follow the new communications sector in the coming future.

Now the consequences of changes for investors may be devastating, there are numerous concerns. On the other hand, new funds can be moved to the newly emerging communications sector. This will presumably present an appealing concept of future growth, as Alphabet, Facebook and Netflix will most likely move here.


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