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SPY GAMES

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 10:48AM

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.

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Quantum stocks soar after report that the Trump administration is in talks to invest directly in the sector

After speculation has swirled for weeks that the US government might consider investing in the quantum sector, discussions are now underway, with the Wall Street Journal reporting that the Trump administration is negotiating with several quantum computing companies about giving the US Commerce Department equity stakes in exchange for federal funding.

Companies in talks include IonQ, Rigetti Computing, and D-Wave Quantum, with each seeking a minimum of $10 million in funding, per the report, while others like Quantum Computing and privately-held Atom Computing consider similar arrangements. The deals "haven't been completed and might change."

IONQ, RGTI, QBTS, and QUBT all soared on the news, and the first three of that quartet are currently the most heavily traded stocks in the premarket after Tesla. Each of the four is up between 11% and 13% as of 5:40am ET.

Exclusive | Trump Administration in Talks to Take Equity Stakes in Quantum-Computing Firms

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Beyond Meat craters in premarket trading on heavy volumes

Beyond Meat’s rally has seemingly gone from well done to overcooked in a hurry.

Shares of the plant-based meat company are cratering, down nearly 20% in premarket trading on heavy volume.

As of 5:05 a.m. ET, the stock has traded more than $60 million in the premarket. That’s the fifth-highest of all stocks listed on US exchanges, trailing only the pure-play quantum computing companies (after a report that the US government may take stakes in these companies) as well as Tesla, which reported earnings after the close on Wednesday.

It’s an about-face for Beyond, which has seen the premarket session be a source of particular strength over the past few sessions. In fact, the stock’s recent peak of $8.86, which marked a rally of 1,672% from its all-time low in less than four sessions, occurred in the premarket session on Wednesday. It’s down more than 60% since that time.

What’s different about the Beyond Meat move compared to past so-called short squeezes we’ve seen in the past is that the cost of borrowing shares has gone down, not up, during its period of intense gains. However, that’s what we would expect given its shares outstanding jumped from ~76 million to close to 400 million in light of its debt-for-equity swap which temporarily gave those creditors control over the company.

So, while its previous parabolic move may have been extremely painful for existing shorts, it’s also making it arguably more attractive for any doubters to put on fresh bets that the surge in the stock is half-baked.

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Southwest’s first full quarter charging for checked bags drives it to record Q3 revenue

Southwest became the third major airline to report its third-quarter earnings when it dropped its results after the bell Wednesday.

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IBM slides despite earnings beat

Here’s how Big Blue did.

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Moderna drops after reporting trial for birth defect vaccine failed

Moderna dropped in after-hours trading Wednesday after it reported that its experimental vaccine for cytomegalovirus (CMV), which can cause birth defects, failed in a late-stage trial.

The company is perhaps best known for being tapped by the government to quickly develop a vaccine for COVID-19 in 2020, which remains its single source of revenue. Investors have been eager for signs that it will add more vaccines to its portfolio soon.

The CMV vaccine was the main product in Moderna’s pipeline prior to the COVID-19 pandemic. In the most recent results, the vaccine was only between 6% and 23% effective in blocking infection, which was “well below” the company’s target of at least 49%, the company said in a statement.

In statements announcing the results, Moderna’s leaders described the results at “disappointing.” The company fell more than 5% after-hours and is down more than 35% this year.