Come Monday, the Standard & Poor's Index will increase its number by 1 — Solventum, which will have the ticker SOLV. 

On Tuesday, it will add another stock, this time GE Vernova GEV. 

And on Wednesday two current members of the index, V.F. Corp.  (VFC)  and Dentsply Sirona  (XRAY)  , will move to other S&P indexes. 

In the process, one of the legendary names in American business, General Electric Co.  (GE) , will have become something smaller and, after 132 years, GE will no longer be just GE. 

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These aren't the only moves S&P Dow Jones will make. And they're happening because two very large companies — GE and 3M  (MMM)  — have concluded they can operate more efficiently and offer shareholders the potential for larger returns by spinning off some of their businesses.

The spinoffs will three more companies: Fox Factory Holding FOXF, ModivCare MODV and E.W. Scripps SSP.

How the indexes get shuffled

The order of events is this: 

Monday: Solventum, which is the guts of 3Ms healthcare business,  joins the S&P 500 with its spinoff from 3M. Solventum's $8.2 billion in 2023 sales represents about a quarter of 3M's 2023 sales. 3M remains in the S&P 500 and the S&P 100 indexes.

Tuesday: GE Vernova joins the index.  It represents General Electric's portfolio of energy companies — renewable energy, power, and digital. In November 2021, GE announced it would split into three companies. One already has been spun off into GE HealthCare GEHC. What remains of GE will simply be GE Aerospace, but it will keep its GE ticker. It also remains in the S&P 500 and S&P 100 indexes.

Wednesday Part 1: V.F. Corp. and Dentsply Sirona will be removed from the S&P 500. VF Corp will become a component of the S&P Smallcap 600 Index. VF markets outdoor and casual wear. Brands include The North Face, Timberline, and Jansport. Dentsply Sirona will join the S&P Midcap 400 Index. The company is a leading maker of dental equipment and dental health products.

Wednesday Part 2: Fox Factory Holding, maker of products for the auto, off-road vehicle and motorcycle markets, will join V.F. Corp. in moving to the S&P 600. Fox Factory is now in the S&P 400. 

Wednesday Part 3: S&P 600 components ModivCare and EW Scripps will be deleted from the index entirely. ModivCare started as Provident Services Corp. and offers social services and depends on government reimbursements. E.W. Scripps owns television stations and programming and the National Spelling Bee competition. It once was one of the nation's biggest newspaper owners and a major radio-station operator.

S&P Dow Jones, which runs the various S&P and Dow Jones indexes, is making moves, all related to size rules for the indexes, which were modified in January. 

V.F. and Dentsply Sirona no longer have market caps big enough for inclusion in the S&P 500. The current minimum is $15.8 billion. 

To be in the S&P 400 requires a market cap of $5.8 billion to $15.8 billion. For inclusion into the S&P 600, the range is $900 million to $5.8 billion.

The two spinoffs going into the S&P 500 were trading very differently even before the spinoffs are final

3M's big healthcare business 

3M is spinning off Solventum because the parent is so big, and it seemed putting the healthcare business into a new venture would be good for everyone. 3M has struggled with growth issues and staggering costs for environmental remediation.

The health business includes tapes and dressings, electronic monitoring devices, orthodonture products, and surgical supplies.

Solventum started to trade on a when-issued basis on March 26 at $91.05 after opening at $80. It finished Friday at $69.55, down 13.1% from Wednesday's close. 

Based in the company's projected of earnings of $6.10 to $6.40, that would produce a forward P/E ratio of around 11. 

 3M will retain a 19.9% interest in Solventum. It is down 3% on the year but shot up 15.1% in March. 

3M, which sells more than 60,000 products, has a huge product mix. It makes everything from cellophane tape and Post-It Notes to Scotchgard, the water-repellent material applied to fabrics.

GE Vernova boosts its parent 

GE Vernova also was trading on a when-issued basis starting on March 27, opening at $115 and jumping to $131.25. It closed on March 28 at $136.75 — a gain of 18.9%. 

Based on projected earnings before interest, taxes and depreciation, that would imply a forward P/E ratio of 12. 

The company projected 2024 sales at $34 billion-to-$35 billion with 2025 revenue rising by  mid-single digits. Free cash-flow this year was projected at $700 million to $1.1 billion and rising to $1.2 billion to $1.8 billion in 2025.

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Barrons noted that the when-issued performance affected GE as well. Wells Fargo analyst Matthew Akers bumped his target price for GE Aerospace from $177 to $200. 

GE was co-founded in 1892 by Thomas Edison and an original member of the Dow Jones Industrial Average. It  evolved into hugely successful conglomerate by the 1980s and 1990s under the late Jack Welch. 

The stock peaked in 2000 as Welch retired and fell on hard times, needing a Warren Buffett bailout to survive just the after the 2008-09 financial crisis. It struggled until 2018 when Larry Culp, already a director, was asked to be CEO. 

Culp cut spending, and GE paid down more than $100 billion in debt. The company sold businesses that didn't work. 

Then, Culp decided to break the company into smaller pieces. The moves have won him many Wall Street fans and may well make his personal GE holdings worth more than $1 billion. 

The stock is up 37.5.5% this year. It jumped 95.6% in 2023, a better performance than Apple  (AAPL) , Alphabet  (GOOG)  and Microsoft  (MSFT) .   

Why the other stocks aren't as robust

In addition to size and growth issues, the stocks being pushed into less prestigious indexes — or out entirely — have been experiencing challenges of late thanks to the Covid-19 pandemic and other forces. 

The prices of the stocks reflect those struggles. 

• V.F. closed up 1.7% on March 28 at $15.34 but are down 18.4% this year. 
• Dentsply Sirona was up 0.4% to $33.19 but is off 6.7% this year.
• Fox Factory Holding was rose $3.8% to $52.07 but has dropped 22.8% this year.
• ModivCare was down 5.9% to $23.45 and has slid 46.7% this year.
• EW Scripps rose 0.8% to $3.93 but has slumped 50.8% this year. 

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The Federal Reserve has pulled off one of the biggest monetary policy surprises in decades, thanks in part to the lessons it learned from an earlier communications error, and it looks set to deliver on perhaps its most difficult challenge. 

But while some would think this refers to the central bank's chances of executing a so-called soft landing for the world's biggest economy, where inflation is tamed without triggering a recession, the Fed's greater accomplishment is actually even more difficult.

It's slowly convinced markets to align with its interest-rate-cut forecasts while quietly touting the strength of the underlying economy. That's enabled investors to focus on growth and profits over policy, and it has helped power stocks to their best back-to-back quarterly performance in over a decade. 

Friday's PCE inflation report is a great example of the Fed's messaging. It has preached patience as the central bank brings price gains back to its 2% target while reminding investors that its aggressive 2022 rate hikes haven't pounded the economy into submission. 

The Fed's preferred inflation gauge cooled modestly last month, with the closely tracked core reading easing to 2.8%, even as consumer spending popped by nearly twice the level of Wall Street forecasts. 

A patient Fed and surging markets

The PCE reading followed an upwardly revised tally for fourth-quarter GDP, which showed an improved growth rate of 3.4% and inflation pressures that held very close to the Fed's 2% over the final six months of last year.

Jeffery Roach, chief economist for LPL Financial in Charlotte, says the broader spending trend is still weakening. He notes the decline in personal income, but adds that "where we sit today, markets need to have the same patience the Fed is exhibiting."

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Still, if consumers are spending, inflation is slowing and the economy is growing, Fed rate forecasts might not matter so much and the market's obsession with its messaging to derive its next move will quickly begin to fade.

We've seen evidence of that already, with the S&P 500 rising to a record 5,254.35 points on Thursday to close out a quarterly gain of 10.16%, the best in five years.

The benchmark's advance came amid another call for patience on rates from Federal Reserve Gov. Christopher Waller earlier this week and Fed Chairman Jerome Powell's similarly cautious remarks earlier this month.

Fed's past errors haunt policy

"We’re in a situation where if we ease too much or too soon, we could see inflation come back, and if we ease too late, we could do unnecessary harm to employment and people’s working lives," Powell told reporters in Washington following the Fed's last policy meeting. 

"We want to be careful," he added. "And fortunately, with the economy growing, with the labor market strong, and with inflation coming down, we can approach that question carefully and let the data speak on that." 

The Fed's tone likely reflects the criticism it faced in declaring post-covid inflation pressures "transitory" in early 2021. 

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With the Fed having made that prognosis and repeating it through much of that summer, inflation ultimately accelerated faster than anyone expected and peaked at an annualized rate of 9.1% in summer 2022.

The S&P 500's gains this year have also defined a notable rise in Treasury bond yields, which have adjusted to the Fed's efforts to align markets to its forecast of three rate cuts this year as well as a heftier slate of issuance to fund the government's fiscal ambitions.

Benchmark 10-year Treasury note yields have risen more than 34 basis points (0.34 percentage points) this year, ending the quarter at 4.204%, while 2-year notes gained 37.8 basis points over the same period to 4.628%.

"Another way of looking at the 10-year Treasury yield surge is to consider it a sign of increasing investor confidence," said Trading.biz analyst Rahul Nambiampurath, as investors exit fixed-income investments into riskier assets with higher returns.

It's the economy, stupid

That likely means investors are starting to believe in a U.S. growth story that has lost some of its late-2023 steam but is still on pace to continue adding jobs and power consumer spending as it avoids recession and adds further distance between itself and the rest of the world's major economies. 

Ian Shepherdson of Pantheon Macroeconomics notes that spending on services, the most important growth component, has accelerated to 4.5% over the past three months, the fastest since the post-COVID rebound in 2021.

Any gains in March, he suggests, will bring upward revisions to first-quarter GDP forecasts, which the Atlanta Fed currently pegs at around 2.1%.

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Corporate profits, powered partly by consumers who aren't worried about their jobs and are happy to dip into post-pandemic savings, also carry some solid momentum into the start of the year.

Bill Adams, chief economist for Comerica Bank in Dallas, notes that stripping out losses at the Fed (tied to its $7.7 trillion balance sheet), which are included in the Bureau of Economic Analysis's data, corporate profits rose at an annualized rate of 5.9% over the final three months of last year. 

Rate cuts 'welcome but not needed'

Looking into 2024, Wall Street forecasters see collective S&P 500 profits rising just under 10%, around double the 2023 figure, to an overall average of $243 a share.

"The stock market performed extremely well during the first quarter of 2024, and as long as earnings remain strong, the market can continue to move higher," said Jeremy Straub, chief executive and chief investment officer at Coastal Wealth in Fort Lauderdale, Fla. 

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"While rate cuts from the Fed would be welcome news for stocks, they are not a requirement for a strong market, which has been able to rally for the past 18 months even with high interest rates," he added. "We believe stock investors are adjusting to this new normal of higher interest rates."

So, with bonds likely focused on supply metrics and closely tracking the levels of foreign demand in benchmark auctions and stocks keying on earnings and profit margins, we may be seeing the Fed's influence fade quietly into the background.

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The Covid-19 pandemic of 2020 devastated hundreds of businesses in the U.S., forcing several establishments to file for bankruptcy, such as retailers, restaurants, real estate firms and energy companies.

Most people remember the names of many of the restaurants that fell into bankruptcy, including Chuck E. Cheese, Souplantation, Sweet Tomatoes, HomeTown Buffet and Old Country Buffet. Several retail chains, such as JC Penney, Bed Bath & Beyond and a list of movie theater operators also filed Chapter 11.

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Pandemic caused movie theater bankruptcies

Movie theater operator CMX Cinemas filed for Chapter 11 bankruptcy in April 2020 after the Covid-19 pandemic devastated the industry.

Regal Cinemas owner Cineworld also struggled during the pandemic and afterward, as it closed over 50 Regal theaters and filed bankruptcy in September 2022. Cineworld, the second largest theater operator behind AMC, emerged from bankruptcy July 31, 2023.

The movie theater industry has struggled to lure people back into their brick-and-mortar properties after the Covid-19 pandemic, as movie fans have been reluctant to return to indoor theaters after the healthcare disaster. The smaller crowds in movie venues since the pandemic began has led to more theater operators filing bankruptcy.

Iconic movie theater chain Metropolitan Theatres Corp. filed for Chapter 11 bankruptcy protection to reorganize its business affairs, which will include restructuring and possibly rejecting theater leases, company president David Corwin wrote in a bankruptcy declaration.

The Los Angeles-based movie theater chain on Feb. 29 filed its Subchapter V bankruptcy petition in the U.S. Bankruptcy Court for the Central District of California in Los Angeles.

Some movie theater chains that filed for Chapter 11 protection because of the effects of the Covid-19 pandemic , however, emerged from reorganization and are thriving in the business.

Alamo Drafthouse chain seeking a sale

Dine-in movie theater chain Alamo Drafthouse Cinema has bucked the trend of distressed multiplexes across the nation, as its recent success may have made it attractive for an acquisition. The Austin, Texas, company is seeking a buyer for its 41-theater chain, with 17 franchise-owned sites, located in 13 states, Deadline reported. 

Word of the company inquiring about a possible sale came from several unnamed Deadline sources, who also said no asking price has been revealed and there have been no bidders yet.

Alamo Drafthouse, founded in 1997, reportedly generated $134 million at the box office in 2023, which was more than a 25% increase over 2022.

The dine-in movie theater chain in March 2021 filed for Chapter 11 bankruptcy suffering from the effects of the Covid-19 pandemic and emerged from bankruptcy in June 2021 after a sale to an investment group that included Altamont Capital Partners, Fortress Investment Group and founder Tim League.

The theater chain presents the latest motion picture releases, foreign language films or cinematic classics. The theaters' seats have tables in front of them for guests' food and drinks that are delivered to their seats. Some theaters also have recliner chairs. 

Each location's menu serves burgers, pizzas, salads, snacks and desserts, and the bar features selections from local craft breweries, as well as innovative cocktails, according to the theater chain's website.

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