Major Events in the US Stock Market! Just now, the "Russell Index Annual Rebalancing" in the US stock market has been completed
The Russell Index of US stocks has completed its annual rebalancing, with the top ten companies now accounting for 34.3% of the index's weight, the highest level in 40 years. Microsoft will become the largest company by market capitalization in the index, replacing Apple. NVIDIA has surpassed Amazon, rising to third place. This restructuring highlights the dominant position of large US technology companies in the stock market
On Friday, June 28th, the US stock market's Russell series indices (Russell 1000, Russell 2000, Russell 3000, etc.) ushered in the heavyweight "annual rebalancing".
The so-called "annual rebalancing" refers to the index provider FTSE Russell re-adjusting the constituent stocks of the Russell series indices to ensure that these indices accurately reflect the current US stock market conditions. This process usually takes place on the last Friday of June each year. FTSE Russell evaluates all eligible US-listed companies based on factors such as market capitalization and liquidity, determines which companies will be included or excluded from each index, and recalculates the weights of the companies remaining in the index. The restructuring will officially take effect on Monday.
Due to a large amount of funds (approximately $10.5 trillion by the end of 2023) tracking these indices, the Russell index restructuring day is usually one of the busiest trading days in the US stock market throughout the year. Although the formal restructuring of the indices takes place after the market close, market participants need to start adjusting their positions before the close. Fund managers and investors will engage in significant trading on the restructuring day to align their portfolios with the upcoming updated indices. Most of these trades are concentrated in the closing period.
According to data publicly released by the NASDAQ Stock Market, this year's restructuring day saw approximately 29 billion shares traded within 0.878 seconds through the NASDAQ closing cross system, with a total value of $953 billion, setting a new record high for Russell index restructuring days, far exceeding the $809 billion record set in 2021.
After the restructuring, the top ten companies' weights exceed 30%, and the technology sector's weight reaches the highest level in 40 years
This restructuring highlights the dominant position of large US technology companies in the stock market. After the restructuring, the total weight of the top ten companies in the Russell 1000 index will reach 34.3%, the highest level in 40 years. This number is nearly 20 percentage points higher than when the index was established in 1984.
Microsoft will once again become the largest company by market capitalization in the index, replacing Apple. NVIDIA will surpass Amazon, rising to the third position. Broadcom jumped from 24th place last year to 9th place, entering the top ten for the first time.
The overall weight of the technology sector will reach 36.1%, the highest in the history of the index, more than three times the 14.2% in 1984. Former small-cap stocks such as AMD, due to the surge in AIGC, will be included in Russell's large-cap index.
FTSE Russell CEO Fiona Bassett told the media that the Russell series indices are adapting to changes in the market. In an interview with the media this week, she stated, "After the weight adjustment of the Russell 1000 index, the weight of technology stocks has increased, indicating that the US economy is restructuring around technology, reflecting the changing structure of the US economy, and the increasing contribution of technology companies to economic growth."
At the same time, in the small-cap stocks sector, Fiona mentioned that the Russell 2000 index is "more like a healthcare stock". Among the 243 newly added small-cap stocks, 41 belong to the healthcare industry. After the rebalancing, the weight of this industry is expected to increase from 14.7% to 16.7%, ranking second in the entire industry