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. Last Updated: 07/27/2016

Yahoo! Up 23% as It Joins Index




NEW YORK -- Shares of Yahoo! Inc. soared 23 percent, with index funds scrambling to pick up shares of the Internet company as it prepared to enter the Standard & Poor's 500.


Shares of the Internet powerhouse Tuesday jumped $67.18 3/4 to $348 in trading on the Nasdaq Stock Market. Since financial services provider Standard and Poor's announced on Nov. 30 that Yahoo would join the index, shares have risen nearly 66 percent.


The S&P 500 is an index that contains 500 of the most widely held stocks. Yahoo joined it at the close of trading Tuesday.


Index funds that track the performance of the S&P 500 are increasingly popular among investors who want to share the benefits of the blossoming stock market but want to minimize the risk in holding a small number of stocks.


However, to mimic the S&P 500, indexes needed to obtain shares of Yahoo! by the end of trading Tuesday - and those have been hard to come by.


Yahoo only has 260,000 shares, and only about two-thirds of those shares are actively traded, analysts estimate.


As a result of the thin liquidity, the stock soared Tuesday. More than half of the day's rise occurred in the last 45 minutes of trading.


Yahoo, based in Santa Clara, California, is one of the most popular starting points for Internet users. Perhaps more importantly for investors, Yahoo is one of the few Internet companies that makes a profit.