Palo Alto Networks shares are on the rise after S&P announced the stock will replace Dish Network in the S&P 500. Yahoo Finance Live's Brad Smith and Julie Hyman explain why stocks move on these types of announcements.
JULIE HYMAN: But first, let's talk about another mover, Palo Alto. It's replacing Dish Network in the S&P 500. Dish is going to get knocked down to the S&P mid-cap index. Palo Alto, up about 5% here. Dish Network's down about 1.6%. The S&P noted in its announcement, it wants to ensure that each index has stocks representative of the market capitalization range. This change, by the way, will be happening after the close on June 20, I believe.
Remember, the market is closed on June 19 for Juneteenth, so that's why it's happening on a Tuesday. Excuse me, before the start of trading on June 20th, not after the close. Before the start of trading. That's when that takes effect.
BRAD SMITH: Yeah every year, there's about what 20, 25 stocks that usually get rebalanced or stocks that leave the S&P 500. And then in that, you've got the replacement. Other companies that are actually meeting some of the prerequisites for membership within that index.
So for Palo Alto Networks and all of the kind of concerted energy or, at least, mindshare around the cybersecurity landscape and how Palo Alto networks has played a role in that, they're certainly getting a ton of investor attention over the year to date up by about 62% this year.
JULIE HYMAN: Yeah. And the reason that these stocks move so much, of course, just a reminder for folks, on these kinds of announcements is there is a lot of money that tracks the S&P 500 and its associated indices. So if there's an ETF, if there's an index fund, they have to make the changes that then will mirror the changes that are happening in the fund. So that's why you tend to see this happening.
There's one more stock that's affected by all of this, by the way. It's Blackstone because there had been some speculation that it might be entering the S&P 500. Didn't make it. And so I believe we had seen those shares falling back a little bit in today's session. But we'll keep tracking that.