Tesla has catapulted 731 per cent this year in anticipation of the historic inclusion, making it the biggest company ever to be added to the benchmark. The EV pioneer will also be joining the S&P 100, replacing oil and gas firm Occidental Petroleum Corp., which fell 12 per cent premarket.
Traders who spent most of the year pushing up shares of Tesla in anticipation of surging demand from index funds saw its climax Friday, as frantic purchases by passive managers drove the shares up almost 5 per cent as exchanges closed. At the end of the day, Tesla shares closed at an all-time high. More than US$150 billion worth of Tesla shares traded on Friday, ahead of the index inclusion.
“There is strong precedence for positive returns for stocks prior to S&P 500 inclusion and post announcement, but very limited precedent for near term out performance post inclusion,” Sanford C. Bernstein analyst Toni Sacconaghi wrote in a note earlier this month. Market strategists have been divided on how the addition of the famously volatile stock would impact the benchmark gauge. According to Susquehanna quantitative derivative strategist Souhow Yao, the inclusion will have a limited impact on implied volatility, and that if Tesla was added a month ago, volatility for the S&P 500 would have actually decreased.