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Effect of Tesla being added to S&P 500

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Posted (edited)

If Tesla is added to the S&P 500, what immediate effect is it likely to have to the index reading?

Can it have a distorting effect in the short term?

Edited by Jim A
adding to question
  • Thought provoking 1

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Looking at its definition on  https://www.investopedia.com/top-10-s-and-p-500-stocks-by-index-weight-4843111

"Because it's weighted by market cap, the largest stocks have a big impact on both the long-term performance and daily movement of the index. The 10 biggest stocks make up more than quarter of the index's market value. This means that investors should familiarize themselves with these 10 giant components to understand what drives the broader market."

Tesla will add to an uptrend if it is performing well but that index is used to big companies so it will compensate if some of them don't perform as well as Tesla.  

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