On Monday, July 10, 2023, the shares of Apple, Microsoft, and other heavyweight companies experienced a dip. This decline can be attributed to the upcoming Nasdaq 100 rebalance, which is scheduled for July 24, 2023.
The Nasdaq 100 is a stock market index that specifically tracks the performance of 100 of the largest non-financial companies listed on the Nasdaq stock exchange. Its purpose is to address the overconcentration of the index in a few large companies.
The rebalance will reduce the weighting of companies such as Apple, Microsoft, Amazon, and Alphabet (Google). Currently, these four companies account for over 40% of the index’s weighting. The goal is to increase the weighting of smaller companies in the index.
The decline in heavyweight stocks suggests investor concerns about the rebalance’s impact on the Nasdaq 100 performance.
The rebalance will reduce the weighting of these stocks, prompting investment funds to sell shares and maintain desired weighting.
Selling pressure from investment funds is expected to decrease demand for heavyweight company stocks, potentially causing further price declines.
The true impact of the rebalance on the Nasdaq 100 performance is yet to be seen. But Monday’s market reaction indicates close investor monitoring.
Investors are closely watching the rebalance and its potential consequences, as evident from Monday’s market reaction.
