14:42 GMT29 November 2020
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    The S&P Dow Jones Indices’ S&P 500 as one of the most-followed stock market indices across the world, measuring the most valuable American companies listed on stock exchanges in the US. The companies included in the list are described as being recommended by economic experts as good long term investments.

    Tesla, an electric-car company founded by entrepreneur Elon Musk, will join the S&P 500 stock market index before the opening of trading on 21 December, becoming one of the most valuable companies yet added to the stock index, S&P Dow Jones Indices announced Monday.

    Tesla "will be one of the largest weight additions to the S&P 500 in the last decade, and consequently will generate one of the largest funding trades in S&P 500 history," S&P Dow Jones Indices said in an online document.

    Shares of the company jumped 12 percent after the announcement was made. According to Reuters, Tesla currently has a market capitalization of over $380 billion. Some reports suggest that the value of the electric-car manufacturer could make up 1 percent of the entire index.

    The Tesla Cybertruck is unveiled at Tesla's design studio Thursday, Nov. 21, 2019, in Hawthorne, Calif. CEO Elon Musk is taking on the workhorse heavy pickup truck market with his latest electric vehicle.
    © AP Photo / Ringo H.W. Chiu
    The Tesla Cybertruck is unveiled at Tesla's design studio Thursday, Nov. 21, 2019, in Hawthorne, Calif. CEO Elon Musk is taking on the workhorse heavy pickup truck market with his latest electric vehicle.

    Dow Jones noted that investment funds indexed to the S&P 500 will have to sell approximately $51 billion worth of shares of companies already in the stock market index to buy shares of the electric car company, in order to add Tesla to the list.

     “Due to the large size of the addition, S&P Dow Jones Indices is seeking feedback through a consultation to the investment community to determine if Tesla should be added all at once on the rebalance effective date or in two separate tranches ending on the rebalance effective date,” S&P asked investors.

    Earlier, Tesla shares plunged by over 8 percent due to an ongoing tariff standoff between the United States and China over the importation of key car parts.

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    Dow Jones, business, rating, Elon Musk, Tesla Motors, Tesla, S&P 500
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