On June 17, the leading Exchange Traded Fund (ETF) investing in S&P 500 tech companies, the Technology Sector SPDR Select Sector Fund (ticker symbol XLK), adjusted its investment weight in Nvidia from the previous 6% to 21% during its regular asset reallocation (rebalancing). It’s also notable that it reduced Apple’s proportion to 4.5%.
Bloomberg evaluated this as a significant event, indicating that the leading tech stock in the U.S. has shifted from Apple to Nvidia. Considering XLK ETF’s total assets under management total $71.2 billion, it’s expected that large-scale purchase orders for Nvidia will be issued during the asset reallocation process.
As a result of the asset reallocation, the ETF is expected to purchase $11 billion in Nvidia shares and dispose of $12 billion in Apple shares.
Upon hearing the news, Nvidia’s stock rose in the early trading hours of the New York Stock Exchange on June 17. Nvidia achieved an all-time high during the trading session but underwent a downward reversal and closed down 0.68% from the previous trading day due to news of being embroiled in a lawsuit.
On June 17, the U.S. Supreme Court agreed to review a class-action lawsuit against Nvidia for not disclosing its chip sales for cryptocurrency mining.
Presiding over the first trial, the federal district court dismissed this lawsuit in 2021, but the federal appeals court accepted the plaintiff’s argument and allowed the class-action lawsuit.
As a result, it closed lower, but experts believe there is a high possibility of an upward reversal in the future.
It is of considerable significance that the most popular tech stock ETF in the U.S. has rebalanced, reducing Apple and significantly increasing the weight of Nvidia.