S&P 500: Palantir, Dell, and Erie Indemnity rise

The renowned Standard & Poor's 500 Index, known for including large companies, has once again adjusted its market capitalization threshold and is now represented by companies with a minimum market capitalization of $18 billion. This is an increase from the minimum requirements that were lowered during the 2008-2009 financial crisis. The decision by S&P Dow Jones Indices, which manages this index, was made amid rising inflationary pressures and interest rates by the Federal Reserve. The new threshold has been in effect since September 23, and three companies were added to the S&P 500 while three others were removed. Palantir Technologies Inc., known for its big-data analytics and co-founded by Peter Thiel, co-founder of PayPal, is one of the new additions. Palantir has seen a value increase of nearly 77% this year and now has a market capitalization of $68 billion. Despite some controversies regarding potential illegal surveillance, the company has a strong academic connection to Stanford University, with six out of seven directors, including CEO Alexander Karp and Thiel, being alumni of this institution. Another new member of the S&P 500 is Dell Technologies. Following the acquisition of EMC in 2016 for $50 billion, Dell has transformed from a traditional PC manufacturer to a provider of high-end servers for artificial intelligence and security applications. The company's stock rose 33% in 2024, and its current market capitalization is $78 billion. Erie Indemnity, a traditional and profitable insurance company, is the third new addition to the index. Founded in 1925, the company offers various insurance products in twelve states and saw a stock increase of 47.6% in 2024. The market capitalization is $26.5 billion. Conversely, American Airlines, Etsy, and Bio-Rad Laboratories were removed from the index. American Airlines continues to suffer from the aftereffects of the Covid-19 pandemic; its stock lost 21% this year and has a market capitalization of about $7 billion. Etsy and Bio-Rad Laboratories were also removed as they could not maintain their impressive pandemic-era gains. American Airlines will be replaced in the S&P MidCap 400 by Tegna, while Bio-Rad and Etsy’s removals will lead to corresponding changes in the MidCap and SmallCap indices.