By Emily Bary
Marvell, Reddit and a mortgage 'dark horse' could make the cut during the next quarterly rebalancing of the benchmark index
The S&amp;P 500 is due for its quarterly rebalance.
It's almost time for the S&amp;P 500's quarterly shakeup, which could usher Marvell Technology and several other stocks into the benchmark index.
Every quarter, S&amp;P Dow Jones Indices takes the opportunity to assess whether discretionary changes should be made to its flagship index. In some cases - such as at this time last year - the index committee decides not to swap in any new members. But generally, S&amp;P Dow Jones Indices opts for at least some changes, and this time around, any of those would be announced after Friday's close.
Marvell Technology (MRVL) is a leading candidate for inclusion given that its market capitalization has surged to $245 billion. That's significantly above the minimum market capitalization of $22.7 billion that is required for entry into the S&amp;P 500 SPX and also well ahead of the market cap of the next largest eligible company, Bloom Energy (BE), at $74 billion.
Not only is Marvell large, but it has also maintained an average market capitalization north of $50 billion over the past year, Stephens analyst Melissa Roberts told MarketWatch earlier this week. That could be a signal to the committee that Marvell's recent ascent isn't just a flash in the pan.
Don't miss: Marvell looks poised to finally get a spot in the S&amp;P 500 after explosive stock surge
Roberts flagged Flex (FLEX), a manufacturing company that plays into the data-center market, as another potential candidate within the information-technology sector. Flex has become outsize within the S&amp;P MidCap 400 index MID, and IT companies in general are underrepresented in the S&amp;P 500 relative to their collective weighting in the broader S&amp;P Total Market Index, she said.
The index committee may want to start beefing up the IT sector ahead of anticipated initial public offerings from SpaceX (SPCX), Anthropic and OpenAI, Roberts added. Those companies will likely be classified as either communications services or IT businesses, she said, and the committee may seek to ensure there's sufficient &#34;breadth and depth&#34; in the various sectors of the S&amp;P 500.
That said, it will be some time before those megacap technology companies make it into the S&amp;P 500 after their IPOs. S&amp;P Dow Jones Indices announced on Thursday that it decided against amending its policies for index inclusion. Had it changed its rules, companies like SpaceX would have been eligible for entry as soon as six months after their IPOs - rather than the current requirement of one year after going public - and would have been exempted from profitability requirements. SpaceX reported a steep net loss last year.
See more: In 'wild' twist, SpaceX won't be allowed early entry to the S&amp;P 500 after all
Within the communications-services sector, Roberts pointed to Reddit (RDDT) as a possible candidate for entry. The social-media company is worth $33 billion.
She also saw opportunities for additions within the industrial sector. Compelling candidates there include Bloom Energy, Ferguson Enterprises (FERG) and MasTec (MTZ), according to Roberts. And while &#34;you don't technically really need&#34; a financial addition to the index, as that sector isn't underrepresented, Roberts told MarketWatch that mortgage lender Rocket (RKT) is a &#34;dark horse,&#34; as it's newly eligible for inclusion.
To be added to the S&amp;P 500, companies must meet eligibility requirements around things like market capitalization, float and profitability. When looking at companies that clear those bars, the index committee then has discretion over which companies to include and may informally consider factors like sector weightings when doing so.
Any quarterly changes announced on Friday would become effective ahead of the open on Monday, June 22. S&amp;P Dow Jones Indices also makes tweaks at unscheduled times, such as when a current component gets acquired.
Roberts noted in a recent report that the second quarter typically has the lowest turnover among quarterly rebalances. Furthermore, there's &#34;a strong M&amp;A pipeline&#34; that could prompt other changes outside of the quarterly cadence.
Read: Index funds leave you more vulnerable to single-stock swings than you'd think
-Emily Bary
This content was created by MarketWatch, which is operated by Dow Jones &amp; Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
06-05-26 1425ET

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The S&P 500 is approaching its quarterly rebalance, with Marvell Technology (MRVL) as a leading candidate for inclusion due to its $245 billion market cap. Other potential additions include Flex (FLEX), Reddit (RDDT), Bloom Energy (BE), Ferguson Enterprises (FERG), MasTec (MTZ), and Rocket (RKT). Analysts suggest these selections may address sector underrepresentation ahead of major tech IPOs. Changes are expected after Friday's close and effective June 22.

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Bloom Energy

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Ferguson Plc

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GraniteShares 2x Long RDDT Daily ETF

GraniteShares 2x Long MRVL Daily ETF

S&P 500

OpenAI

An S&P 500 shakeup is hours away. These stocks could soon earn spots in the index.