What Happened?
Shares of hotel and casino entertainment company Caesars Entertainment (NASDAQ: CZR) fell 1.5% in the morning session after S&P Dow Jones Indices announced that the company will be removed from the S&P 500 index.
The removal, part of a quarterly rebalancing, is scheduled to take effect before the start of trading on September 22. Caesars' market capitalization has declined below the minimum threshold required for inclusion in the large-cap index. When a company is removed from a major index like the S&P 500, tracker funds and ETFs are forced to sell their holdings, which creates significant selling pressure on the stock. According to the announcement, Caesars Entertainment will be moved to the S&P SmallCap 600 Index. The company will be replaced in the S&P 500 by online brokerage Robinhood Markets (HOOD).
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Caesars Entertainment? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Caesars Entertainment’s shares are very volatile and have had 20 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 previous big move we wrote about was 6 days ago when the stock dropped 3.1% on the news that the major indices continued to retreat (Nasdaq -1.5%, S&P 500 -1.2%) amid profit-taking and renewed concerns about tariffs.
Investors reacted to a federal court ruling that most of President Trump's global tariffs were illegal, raising uncertainty over trade policy and the fiscal impact of potential refunds. Rising Treasury yields added to the pressure, with the 10-year climbing above 4.2% and the 30-year nearing 5%, intensifying worries about stretched equity valuations. September's historically weak track record for stocks further dampened sentiment, leaving traders cautious ahead of the jobs report later in the week and the Federal Reserve's upcoming rate decision.
Caesars Entertainment is down 20.7% since the beginning of the year, and at $25.84 per share, it is trading 43.3% below its 52-week high of $45.55 from October 2024. Investors who bought $1,000 worth of Caesars Entertainment’s shares 5 years ago would now be looking at an investment worth $517.37.
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