According to a Barclays report, Apollo Global Management and KKR & Co. are still on track to eventually become part of the S&P 500 Index. However, their immediate outlook may be impacted by higher interest rates, which could result in unrealized losses on their fixed income investments, particularly in their insurance businesses. The S&P 500 requires earnings measured by Generally Accepted Accounting Principles (GAAP), and the recent rise in interest rates may negatively affect both companies’ GAAP earnings. This development comes after Blackstone’s inclusion in the S&P 500 in September, which has made the index inclusion narrative increasingly important for alternative asset managers.
In extended trading, some stocks experienced significant movements. Arista Networks, a cloud networking solutions company, saw a 6% increase after reporting better-than-expected earnings and revenue in its latest financial report. However, Lattice Semiconductor, a maker of low-power programmable chips, dropped about 16% due to its fourth-quarter revenue forecast falling short of analysts’ estimates. On the other hand, shares of chipmaker Wolfspeed rose over 11% following its fiscal first-quarter results, where it reported a lower loss per share than expected.
In the futures market, U.S. stock futures remained relatively unchanged. The Dow Jones Industrial Average added only 2 points, while futures tied to the S&P 500 and Nasdaq 100 remained mostly flat.
Overall, the report highlights the potential challenges faced by Apollo Global Management and KKR & Co. in their journey towards joining the S&P 500, given the impact of higher interest rates on their earnings. Meanwhile, the after-hours trading activity indicates the mixed performance of certain companies, with Arista Networks experiencing gains, Lattice Semiconductor facing a decline, and Wolfspeed showing positive results.