On May 12, medical device maker DexCom (NASDAQ: DXCM) and pie purveyor Domino's Pizza (NYSE: DPZ) joined an exclusive club comprised of some of the most famous large-cap stocks: the S&P 500 index. DexCom replaces Allergan, which has been acquired. Domino's slides in for fashion stock Capri Holdings (NYSE: CPRI), since, according to index manager S&P Dow Jones Indices, Domino's Pizza "is more representative of the small-cap market space."
The S&P 500 is the benchmark stock index, and supposedly confers a S&P 500 "phenomenon" or "effect" on the stocks that it comprises: Once a stock becomes a component of the famous index, its price tends to temporarily rise higher due to the added renown. The stock also gets a lift from being a juicier target for the many index funds that put money in those 500 stocks.
Is this significant, even for long-term, buy-and-hold, fundamental investors? And is it enough of a reason to buy new additions like DexCom and Domino's?