The index gurus are at it again. Some of the best-known stocks are getting reclassified on Friday, and that means a lot of money is going to move around.
Ever wonder why Walmart is classified as a consumer staples stock in the S&P 500, but similar retailers such as Target, Dollar General and Dollar Tree are classified as consumer discretionary stocks? A lot of other people have wondered as well.
Target, Dollar General and Dollar Tree will move from the consumer discretionary corner of the stock market, and join Walmart as consumer staples companies.
Ever wonder why Visa, Mastercard and Paypal, which seem like they're financials, are actually listed as Technology stocks instead?
Today, there is $6 trillion directly indexed to just the S&P 500, the largest of all the indexes in the amount of money tied to it. There is trillions more that is indirectly indexed. That is, many funds use the S&P as a bogey and try to match their returns without paying a licensing fee to Standard & Poor's.
And that's just the S&P 500. There are thousands of indexes that slice and dice the stock and bond market in endless ways.