What Happened?
Shares of alternative asset manager Ares Management (NYSE: ARES) jumped 8.5% in the afternoon session after reports revealed the company was set to be included in the S&P 500 index. S&P Dow Jones Indices announced that Ares Management would replace Kellanova in the benchmark index before the market opened on December 11. Kellanova's removal from the index followed its planned acquisition by the privately held company Mars Inc. A stock's inclusion in a major index like the S&P 500 is often seen as a positive development. This is because investment funds that track the index are then required to buy shares of the newly added company to ensure their portfolios mirror the index's composition. This anticipated buying from large institutional investors created strong demand for the stock.
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What Is The Market Telling Us
Ares’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 2 months ago when the stock dropped 3.8% on the news that the U.S. government hurtled toward a potential shutdown, sparking economic uncertainty and weighing on investor confidence. Market volatility increased as a partisan standoff pushed the federal government closer to a shutdown. If lawmakers fail to reach a spending agreement, a shutdown would begin, furloughing thousands of federal workers. This prospect has weighed on investor sentiment, creating a 'risk-off' mood in the markets as traders brace for potential economic disruption. The political uncertainty adds a layer of caution for investors heading into the final day of the month. Adding to the weakness, a key report showed U.S. consumer confidence unexpectedly fell to a five-month low in September. The Conference Board's consumer confidence index slid to 94.2, a steeper drop than analysts had anticipated and its lowest reading since April. This downturn reflects growing pessimism among Americans about inflation and a weakening job market. Consumer confidence is a closely watched economic indicator as it gauges households' willingness to spend. A decline suggests that consumers may pull back on discretionary purchases, such as dining out or shopping for non-essential goods, which could negatively impact the future revenues and profits of companies in these sectors.
Ares is flat since the beginning of the year, and at $177.46 per share, it is trading 10.5% below its 52-week high of $198.22 from January 2025. Investors who bought $1,000 worth of Ares’s shares 5 years ago would now be looking at an investment worth $3,669.
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