Shares of social media company Twitter Inc. (NYSE:TWTR) soared over 5% Tuesday, hitting a three-year high, after Dow Jones Indices announced it would replace Monsanto Company (NYSE:MON) in the S&P 500.
Twitter will replace agriculture and chemicals maker Monsanto, which is being acquired by German giant Bayer, before the start of trading Thursday.
The news pushed Twitter stock 5.4% higher to US$39.92. This puts the stock at levels not seen since April 2015.
The stock's inclusion in the S&P 500 means mutual funds and exchange-traded funds, or ETFs, that mimic and track the benchmark stock index must now buy Twitter shares to ensure they have the proper weighting in the stock.
Separately, another tech company, Netflix Inc. (NASDAQ:NFLX) will fill the agricultural giant's place on the S&P 100 on Thursday.
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USA Today reported that tech stocks account “for 26.2% of the closely watched” S&P 500, which is weighted by market value, up from 20.8% at the start of the year, according to Bespoke Investment Group.
The index's current tech exposure is “the highest” since November 2000. The addition of Twitter means individual investors will own “an even bigger chunk of technology,” noted USA Today.
"We are keeping an eye" on the tech weighting, Justin Walters, co-founder at Bespoke, told USA TODAY. "These levels have only been seen once in history, and that was near the very peak of the dot-com bubble in 1999-2000."
Shares of Twitter are up nearly 65% year-to-date and more than 110% year-over-year.