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The S&P 500 inclusion effect springboard is back in a big way

That temporary price bump had cooled throughout the 2010s — now it’s heating up again, per a new Goldman Sachs report.

7/24/25 11:48AM

It’s not unusual to see shares pop when a company is set to join the S&P 500, an index now linked to a staggering $20 trillion in global assets. Just last Friday, Block soared 10% after its inclusion was announced, while Datadog spiked 15% on similar news earlier this month.

Known as the “S&P 500 Index Effect,” this short-lived bump is fueled in part by fresh demand from $13 trillion worth of passive funds and ETFs tracking the benchmark, which are required to buy shares of newly added companies.

But over the past decade, this effect had been losing steam. According to a 2023 Harvard study, the average announcement day return for S&P 500 additions dropped from 9.4% in the 1990s to just 0.8% by the late 2010s — partially because markets got better at absorbing these shocks, and traders got better at predicting inclusions.

Now, though, a new Goldman Sachs analysis suggests the inclusion effect may be staging a comeback.

Since 2021, stocks newly added to the S&P 500 have outperformed the equal-weighted index by an average of 4 percentage points on the announcement day — with nearly three-quarters of those stocks beating the benchmark.

Source matters

One factor driving the revival is that fewer companies are migrating from the S&P MidCap 400 Index. Per Goldman’s estimate, stocks added from outside the S&P 400 have seen average relative gains of 5.3 pp since 2013, while those graduating from the midcap index actually dipped 0.4 pp.

Retail hype may also be adding fuel, with recent entrants like Coinbase, Super Micro Computer, Palantir, and Datadog already beloved by traders ahead of their debut — and tied to popular themes like AI or crypto.

So, which big names could be next in line for America’s flagship index?

Go Deeper: Datadog is now in the S&P 500. These big stocks still aren’t.

J. Edward Moreno42m

The FDA is expected to lift restrictions on certain peptides, the NYT reports

The Food and Drug Administration is expected to lift restrictions on certain peptides, allowing the experimental, often injectable substances to be sold by compounding pharmacies, The New York Times reported Tuesday.

The potential move was previously reported by The Wall Street Journal, and teased by Health Secretary Robert F. Kennedy Jr. on the “Joe Rogan Experience” podcast in late February.

Peptides have boomed in popularity recently, with search interest for “peptides” surpassing “ozempic” this month. Many of them are currently understudied and not approved for human use, a rule consumers are able to bypass by purchasing them from suppliers that sell them for, ostensibly, research purposes only.

As reports of the FDA changing its stance of peptides mount, consumer health companies like Hims & Hers and Superpower have been getting ready to roll out their peptide offerings as soon as they get the FDA's blessing.

The peptide gold rush: How impending deregulation could supercharge a shadow industry

Matt Phillips2h

Memory stocks bounce as Bernstein analyst calls TurboQuant fears “overdone”

Memory stocks rose Tuesday, after Bernstein analysts called the recent panic over Google’s TurboQuant AI algorithm “overdone.”

Bernstein analyst Mark Newman wrote:

“[Hard disk drive] and Memory stocks have sold off significantly due in part to fears from Google’s TurboQuant report. This however, should have zero impact on HDD demand and negligible impact on NAND demand. Given the stock sell-off we see this as an attractive entry point for Seagate Technology Holdings, Western Digital and Sandisk’s and upgrade WDC to Outperform.”

All three stocks were up early Tuesday, as was memory chip maker Micron.

Today’s rally stands in stark contrast to the pummeling these shares have endured over the last week, after Google Research published a technical paper on March 24 detailing its TurboQuant AI algorithm, which compresses the amount of data associated with AI operations without affecting the accuracy of AI models.

That was seen as a threat to surging AI demand for memory storage, which has supercharged prices for memory chips and memory-related stocks over the last year.

Matt Phillips2h

Constellation tumbles after posting underwhelming guidance, failing to announce new data center deals

AI power trade Constellation Energy tumbled early Tuesday after issuing an investor day update the market seemed to find unsatisfactory.

The company introduced full-year 2026 operating earnings guidance of between $11 and $12 a share, the midpoint of which is shy of consensus expectations for $11.73, according to FactSet.

Over at Barron’s, Avi Salzman suggested that the company’s failure to unveil any new data center deals as part of the festivities is also adding the the sell-off. He wrote:

“Constellation CEO Joe Dominguez said at the event that he anticipates signing major new deals to provide power to tech companies, but doesn’t want to announce anything too early given the increasing spotlight on data centers today and some changing regulations.

‘I recognize that the last time we spoke, I indicated that we expected to be done with an important transaction by this call, but we’re not ready to announce anything today,’ Dominguez said.

‘There is clearly more scrutiny on data center development,’ he added.”

It’s clear that growing public pushback on data centers is becoming a limiting factor in the AI investment binge.

Constellation Stock Falls. Investors Didn’t Get What They Really Wanted.

Over at Barron’s, Avi Salzman suggested that the company’s failure to unveil any new data center deals as part of the festivities is also adding the the sell-off. He wrote:

“Constellation CEO Joe Dominguez said at the event that he anticipates signing major new deals to provide power to tech companies, but doesn’t want to announce anything too early given the increasing spotlight on data centers today and some changing regulations.

‘I recognize that the last time we spoke, I indicated that we expected to be done with an important transaction by this call, but we’re not ready to announce anything today,’ Dominguez said.

‘There is clearly more scrutiny on data center development,’ he added.”

It’s clear that growing public pushback on data centers is becoming a limiting factor in the AI investment binge.

Luke Kawa2h

CoreWeave jumps after closing unique financing deal to borrow $8.5 billion backed by its chips and Meta’s AI compute purchases

Shares of CoreWeave are spiking on Tuesday after the company announced that it closed an $8.5 billion loan backed by its chips and what Meta is willing to pay to use them.

Last September, the neocloud reached an agreement to provide $14.2 billion worth of AI compute to the social media giant.

CoreWeave said the loan agreement is “the first investment-grade rated financing secured by HPC infrastructure and an associated customer contract.”

These terms helped to reduce CoreWeave’s cost of borrowing: this facility includes a floating rate (SOFR plus 2.25%, or about 5.9%) as well as a fixed rate tranche (at 5.9%). Last July, CoreWeave raised fixed-rate debt with a coupon of 9%.

In a world where Oracle’s five-year credit default swap spreads recently exceeded their 2008 peak, it’s nice to get some positive debt-related news in the AI realm.

Luke Kawa3h

Traders pay a premium for defense ETF that US Secretary of War Pete Hegseth’s broker reportedly attempted to buy before the war

The iShares Defense Industrials Active ETF is spiking this morning after the Financial Times reported that US Secretary of War Pete Hegseth’s broker attempted to make a multimillion-dollar purchase of the ETF ahead of US-Israeli attacks on Iran.

Per the FT, this purchase attempt did not go through after being flagged internally by BlackRock. (The chief Pentagon spokesperson has called this report false and fabricated.)

The actively managed ETF has actually performed poorly since the start of the war, down more than 12% since the end of February versus a less than 8% decline for the SPDR S&P 500 ETF.

But as of about 8:30 a.m. ET, it was up almost 4% in premarket trading. Even more curiously, as of 8:39 a.m. ET, only one of this actively managed ETF’s constituents (Rocket Lab) was up more than the ETF itself.

In other words, in what appears to be an amazing twist, traders are now seemingly willing to pay a premium for IDEF because it got a pseudo seal of approval from Pete Hegseth...

...except it didn’t, because the FT reports that the broker’s purchase order never went through after being flagged internally by BlackRock.