The S&P 500's quarterly rebalancing brings three new members to America's most-followed stock index. CRH, Carvana, and Comfort Systems USA will join the benchmark on December 22, replacing LKQ Corp, Solstice Advanced Materials, and Mohawk Industries.

For investors, index changes matter: funds tracking the S&P 500 must buy incoming stocks and sell outgoing ones, creating predictable price movements.

The New Entrants

CRH (CRH)

CRH is North America's largest provider of building materials, supplying everything from cement and aggregates to asphalt and ready-mix concrete for infrastructure projects.

The company moved its primary listing from London to the New York Stock Exchange in September 2023, making it eligible for S&P 500 inclusion. That strategic shift has now paid off.

"CRH's inclusion in the S&P 500 is well-deserved recognition of the company's place as the US's leading provider of construction materials," said Davy analyst Colin Sheridan.

CRH shares jumped about 7% in after-hours trading on the announcement. Sheridan estimates the index inclusion could create demand for approximately 17% of outstanding shares as index funds rebalance.

Carvana (CVNA)

Carvana's inclusion caps one of the most dramatic turnaround stories in recent market history. The online used-car retailer nearly collapsed in 2022-2023, with shares falling more than 98% from their peak.

The company restructured its debt, slashed costs, and returned to profitability. Shares have surged more than 8,000% from their 2022 lows—an extraordinary comeback that few investors anticipated.

Carvana's addition to the S&P 500 cements its rehabilitation from near-bankruptcy to index-worthy company.

Comfort Systems USA (FIX)

Comfort Systems provides mechanical, electrical, and plumbing services primarily for commercial and industrial buildings. The company has benefited from increased construction spending and infrastructure investment.

Who's Leaving

The three departing companies reflect challenging business conditions:

  • LKQ Corp (LKQ): Auto parts distributor facing margin pressure
  • Solstice Advanced Materials (SOLS): Formerly Olin Corporation's chemicals business
  • Mohawk Industries (MHK): Flooring manufacturer struggling with weak housing-related demand

Removal from the index often accelerates selling pressure as passive funds exit positions.

What This Means for Index Fund Investors

If you own an S&P 500 index fund or ETF (like SPY, VOO, or IVV), these changes happen automatically. Your fund manager will buy CRH, Carvana, and Comfort Systems while selling the departing stocks before December 22.

You don't need to take any action—that's the beauty of passive investing.

Trading Dynamics Around Rebalancing

Index changes create predictable trading patterns that active investors try to exploit:

Pre-announcement: Speculation about which stocks might be added can lift prices of likely candidates.

Post-announcement: Confirmed additions typically rise as traders front-run index fund buying. CRH's 7% pop illustrates this.

Effective date: By December 22, most passive buying is complete. Some stocks give back gains as the "index effect" fades.

Research suggests that while stocks often pop on inclusion announcements, the long-term benefit is less clear. The initial price bump may simply pull forward returns that would have occurred anyway.

The Carvana Lesson

Carvana's journey from penny-stock territory to S&P 500 inclusion offers a reminder about market unpredictability.

When the company traded below $4 in late 2022, most analysts expected bankruptcy. Those who bought at the bottom and held through the recovery have achieved life-changing returns.

But survivorship bias applies: many other near-bankrupt companies actually did fail. For every Carvana, there are numerous cautionary tales of turnaround bets that went to zero.

What to Watch

As December 22 approaches:

  • Monitor trading volumes in all six affected stocks
  • Watch for potential front-running in days before the effective date
  • Note whether inclusion stocks give back gains after rebalancing completes

For most investors, the best strategy is simply to hold your index funds and let the rebalancing happen automatically. Trying to trade around index changes rarely beats the simple approach of staying invested.