S&P's new rules are on the way, benchmark index restructuring, Apple may become the biggest winner!

Wall Street saw a turbulent Friday as major U.S. stock indices are set to reshuffle $250 billion worth of stocks on "triple witching" day.

Stock indices under S&P Dow Jones Indices and FTSE Russell will undergo quarterly rebalancing on Friday. Analysts believe that due to market volatility driven by technical factors, this quarterly rebalancing is expected to be the busiest in nearly four years.

Among them, the weight of Apple Inc. in major benchmark indices will increase after stock market guru Warren Buffett sold shares of the company. Additionally, new rules on the upper limit of S&P index weights are set to take effect. These adjustments aim to maintain index diversity and stability, prevent the performance of a few large companies from excessively influencing the overall index performance, and enable funds and investors tracking these indices to better diversify risks.

With increasing demand from investors tracking benchmark indices for Apple and new additions to the S&P 500 (such as Palantir Technologies Inc. and Dell), analysts predict that computer and software stocks will rise against the trend, while other industries may experience net outflows. According to estimates from Piper Sandler & Co., technology companies are expected to see $40 billion in net purchases, with Apple accounting for the majority.

Piper's Chief Investment Strategist stated:

"Technology will be the only net buying industry."

Analysts believe that the index rebalancing is not a negative event. As fund managers typically trade near the end of the trading session to avoid excessive deviations from benchmarks like the S&P 500 and Russell 3000, the surge in trading volume can provide a strong liquidity window for the broader market.

Following Buffett's sale, Apple's index representation will increase, fully releasing the tradable stock quantity. Therefore, index-tracking funds will need to purchase these stocks to replicate their increased weight. Apple's stock price rose 0.58% to $230.20 during Friday's trading session. Year-to-date, Apple's stock price has surged over 24%.

Furthermore, S&P has adjusted the rules determining the influence of large-cap companies in its select industry indices. Post-adjustment, passive management tools like the Technology Select Sector SPDR Fund (XLK) will limit the weight of the largest market cap stocks first, rather than reducing the weight of the smallest market cap stocks as before.

This week, there are numerous significant events in the U.S. stock market, including the Federal Reserve's first interest rate cut in four years, the index rebalancing, and the arrival of the quarterly "triple witching" day. The "triple witching" day in the U.S. stock market refers to the simultaneous expiration of stock options, stock index futures, and stock index options contracts on the same trading day. This occurs four times a year, in the third Friday of March, June, September, and December "Triple Witching Day" sees a large number of options expiring, which means traders need to adjust their positions. As a result, trading volume on this day usually increases significantly, leading to intense price fluctuations. With $5.1 trillion worth of derivatives, stocks, and indices expiring, this could trigger market turmoil, with traders either continuing to hold and roll over their existing positions or initiating new ones