Tendency of stocks newly added to the S&P composite index to rise in price due to a large number of buy orders as S&P-related index funds add the stock to their portfolios.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
A common situation in which a stock newly added to the S&P 500 undergoes a sharp but temporary increase in price. This occurs because portfolios, ETFs, and other investment vehicles tracking the S&P 500 add this stock, usually in large quantities. This results in a sudden increase in interest in the stock, causing it to jump up in price. Normally, it returns to equilibrium once everyone's portfolio has adjusted to the change.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved