The US stock market's Russell series indexes (Russell 1000, Russell 2000, Russell 3000, etc.) ushered in the heavyweight "annual rebalancing" on Friday, June 28.

The so-called "annual rebalancing" refers to the index provider FTSE Russell's readjustment of the component stocks of its Russell series indexes to ensure that the indexes accurately reflect the current US stock market conditions. This process usually takes place on the last Friday of June each year. FTSE Russell will evaluate all eligible US listed companies based on factors such as market capitalization and liquidity, determine which companies will be included or excluded from various indexes, and recalculate the weights of the companies that remain in the indexes. The restructuring will take effect on Monday.

Since a large amount of money (approximately $10.5 trillion by the end of 2023) tracks these indexes, the Russell index rebalancing day is usually one of the busiest days of trading in the US stock market. Although the formal reconstitution of the indexes takes place after the market closes, market participants need to start adjusting their positions before the close. Fund managers and investors will trade heavily on rebalancing day to adjust their portfolios to match the upcoming updated indexes. Most of these trades are concentrated in the closing period. According to data released by the Nasdaq Exchange, on this year's rebalancing day, the Nasdaq closing cross-matching system completed approximately 2.9 billion shares of transactions within 0.878 seconds, with a total value of $95.3 billion, setting a new historical high for the Russell index rebalancing day, far exceeding the $80.9 billion record set in 2021.

The weight of the top ten companies after restructuring exceeded 30%. The weight of tech stocks reached its highest level in 40 years.

After the restructuring, the top ten companies account for more than 30% of the weight, and the weight of technology stocks has reached the highest level in 40 years.

This rebalancing highlights the dominant position of large technology companies in the US stock market. After the restructuring, the total weight of the top ten companies in the Russell 1000 Index will reach 34.3%, the highest level in 40 years. This number is nearly 20 percentage points higher than when the index was established in 1984.

$Microsoft (MSFT.US)$will become the largest company by market capitalization in the index again, replacing$Apple (AAPL.US)$Apple$NVIDIA (NVDA.US)$Nvidia$Amazon (AMZN.US)$Amazon$Broadcom (AVGO.US)$Ascend from the 24th place last year to the 9th place this year, entering the top ten for the first time.

The weight of the technology industry as a whole will reach 36.1%, the highest in the history of the index, more than three times the 14.2% in 1984. Once small-cap stocks like Apple will be included in Russell's large-cap stock index due to the rise in weight after the AIGC craze.$Super Micro Computer (SMCI.US)$The weight of the healthcare industry is expected to increase from 14.7% to 16.7%, ranking second in the industry among all industries, among the 243 new small-cap stocks added to the index after the rebalancing, 41 belong to the healthcare industry.

Fiona Bassett, CEO of FTSE Russell, told the media that the Russell series of indexes are adapting to changes in the broad market. She said in an interview with the media this week that after the weight adjustment of the Russell 1000 Index, the weight of technology stocks has increased, which reflects the restructuring of the US economy around technology and the increasing contribution of technology companies to economic growth.

"more like a healthcare stock".$Russell 2000 Index (.RUT.US)$"More like a medical care stock." Of the 243 companies newly included in the small cap index, 41 belong to the medical care industry. After rebalancing, the weight of this industry is expected to increase from 14.7% to 16.7%, ranking second in the industry.

Editor/Somer