Shares of heavyweight US companies including Apple and Microsoft declined on Monday after Nasdaq Inc announced that it would rebalance its Nasdaq 100 index to address the benchmark’s overconcentration.
Apple's share price fell 1.1 per cent, while the price of Alphabet and Amazon dipped over 2 per cent. Microsoft and Tesla lost over 1 per cent each.
On late Friday, Nasdaq said it would conduct a "Special Rebalance" of the index to "address overconcentration in the index by redistributing the weights."
The Nasdaq 100 comprises 100 of the largest companies that trade on the Nasdaq exchange. The adjustment will be based on shares outstanding as of 3 July, with changes announced on 14 July, according to a Reuters report. The changes will be effective before the market opens on 24 July, it added.
According to the Reuters report, the changes to the index will force investment funds to adjust their portfolios and sell shares of companies that have their weight on the index reduced.
The seven-largest companies comprise 55 per cent of the Nasdaq 100 and with the special rebalance, the accumulated weightage of these stocks is likely to be reduced. Microsoft Inc has the maximum weight of 12.9 per cent in the benchmark index, followed by Apple at 12.47 per cent, Alphabet at 7.4 per cent, Nvidia at 7.0 per cent, Amazon at 6.9 per cent and Tesla at 4.5 per cent.
The Nasdaq 100 index has surged over 38 per cent this year so far, driven by growth in index heavyweights. Wall Street’s biggest companies have been the biggest contributors to the US stock market’s recovery this year.