How Apple Stock Could Gain From Friday's S&P 500 Rebalancing: What Investors Should Know

Apple Inc AAPL is one of the stocks that could be volatile Friday with S&P 500 and several market indexes rebalancing along with the quarterly triple witching event that sees the expiration of stock options, index futures and index options.

What Happened: The S&P 500, tracked by the SPDR S&P 500 ETF Trust SPY, will complete a quarterly rebalance on Friday. This task is traditionally done on the third Friday of March, June, September, and December.

Apple could be one of the biggest beneficiaries of the rebalancing by the S&P 500 and other market indexes.

The technology giant is currently the second-largest holding in the SPY, with 6.7% of assets and trailing Microsoft Corporation MSFT at 6.8%.

The rebalance will see Apple take the lead in the holdings, as the company's market capitalization of $3.48 trillion is ahead of Microsoft at $3.26 trillion.

Friday's new rebalancing will coincide with upcoming S&P index-capping rules that will adjust how allocations for the largest companies are determined, according to Bloomberg.

The reshuffling of $250 billion in shares in index-tracking funds is expected to benefit the technology sector and companies like Apple the most, the report said.

Piper Sandler estimates that the technology sector will see $40 billion in net buying, as the only sector with a net gain, according to the Bloomberg report.

Apple will account for a large portion of the $40 billion in net buying thanks to its market capitalization, new rules, and recent sales by Warren Buffett and Berkshire Hathaway.

The sale by Berkshire Hathaway has changed the float of Apple stock, with more shares available to investors. Rules from indexes, in some cases, use float-adjusted market capitalizations, which take into account large stakes held by fund managers.

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Why It's Important: Apple and Microsoft have battled back and forth over the last several years as the world's most valuable company. Both companies were briefly passed by Nvidia earlier this year.

Friday's rebalancing is expected to bring market volatility and reshape many index funds moving forward.

For Apple, the event comes as the iPhone 16 is publicly released. Investors and analysts are expressing concerns as consumers grapple with whether the new features and the rollout of Apple Intelligence are worth the upgrade from their existing device.

AAPL Price Action: Apple stock trades at $229.02 versus a 52-week trading range of $164.08 to $237.23. Apple stock is up 23% year-to-date in 2024.

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