Apple made $250 billion worth of index trades on Wall Street

(Bloomberg) — An action-packed week on Wall Street is ending with a bang, as index-tracking funds are poised to reshuffle $250 billion of stocks just as a “triple witch” trading event “.

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Stock benchmarks from the S&P Dow Jones Indices and FTSE Russell will be renewed on Friday, with this quarterly activity expected to be the busiest in nearly four years due to technology-driven market swings.

Share of Apple Inc. will be boosted in key benchmarks after Warren Buffett’s recent sell-off in shares. At the same time, the S&P’s new capping rules, which govern allocations to the largest companies, are scheduled to take effect.

With fresh demand among reference trackers for Apple and new additions to the S&P 500 – Palantir Technologies Inc. and Dell Technologies Inc. – computer and software stocks will buck the general trend of net flows for other industries, Piper Sandler & Co. estimates show.

In total, tech names are expected to record $40 billion in net acquisitions, with Apple accounting for the largest share, Piper data showed.

“Tech will be the only sector network to buy,” said Michael Kantrowitz, Piper’s chief investment strategist.

The rebalancing is set to complete a big week between the Federal Reserve’s first interest rate cut in four years and a quarterly episode known as the triple witch. With $5.1 trillion of derivatives tied to stocks and indexes scheduled to expire on Friday, that could cause market turbulence as traders shift existing positions or start new ones.

However, the index-related reshuffle is by no means an ominous event. Given that money managers tend to trade stocks near the close of the session to avoid unnecessary departures from benchmarks like the S&P 500 and Russell 3000, that concentrated volume can provide a robust liquidity window for the broader market.

The iPhone maker’s index representation will rise after Buffett’s sell-off has fully unleashed the amount of shares available for trading. In turn, index-tracking funds will need to buy the stock to mimic its rising volume.

In addition, S&P has readjusted the rules that determine the influence exerted by the largest firms in its selected sector indices. From now on, passively managed vehicles like the Technology Select Sector SPDR Fund ( XLK ) will cap the largest stocks in proportion to their capitalization, as opposed to a previous approach where the smallest in the group reduced their weighting first.

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