(Bloomberg) -- Match Group Inc. jumped 11% postmarket after S&P Dow Jones Indices announced that the online dating site will join the benchmark S&P 500 Index.
Other additions to the gauge include software company Ceridian HCM Holding Inc. and insurance firm Brown & Brown Inc. They’ll replace Perrigo Co., Unum Group and NOV Inc., all of which will move to the S&P MidCap 400 Index. The changes will take effect prior to the open of trading on Sept. 20.
Stocks frequently jump after being added to the S&P 500 because they become a must-buy for index funds that track it. Such funds had more than $5 trillion in assets at the end of 2020. Brown & Brown rose 2.2% postmarket and Ceridian added 1.6%.
The last high-profile addition to the S&P 500 was Tesla Inc. in December. The electric-car pioneer was the biggest company ever to be added to the gauge, with a market value of about $660 billion the day before it joined -- so large that S&P Dow Jones considered adding it in two separate chunks. (In the end, it went in all at once.)
Tesla’s stock surged in the lead-up to its inclusion, including a 22% rally in the three days following the announcement that it would be added. However, the stock fell 6.5% the day it joined and has been relatively flat since then.
To be eligible for inclusion in the benchmark, a company must have a market capitalization of at least $13.1 billion and be highly liquid. It also has to have posted a profit in its most recent quarter and the sum of its last four quarters’ earnings must be positive, among other metrics.
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