SpaceX shares surged 19.2% on their Wall Street debut, giving the company a market value of $2.1 trillion. While you might want to ignore all the hubbub around SpaceX, Elon Musk and IPOs, your 401(k) likely can't. This was reported by Qazaqyia.kz citing Associated Press.
SpaceX is now worth more than Exxon Mobil, Bank of America and Coca-Cola combined. If SpaceX maintains that big a value, it will join some high-profile stock indexes like the S&P 500. Many of these indexes don't care about how realistic a company's growth plans are or who its CEO is. They're simply trying to show how slices of the market, or the whole thing, are performing. And if SpaceX is big enough to meet the qualifications to join those indexes, whether it's in a few weeks or a year, it will gain entry.
That matters for investors and their 401(k) accounts because they're depending more than ever on funds that simply mimic these indexes. It's a lower-cost way to invest, allowing savers to keep more of their investments. Partly because of that, such index funds have usually proven to be better performers than funds that try to pick and choose individual stocks. Just one in five actively managed U.S. stock funds survived and beat their average index peer over the last decade, at 21%, according to Morningstar's data through 2025. Such disparities in performance meant investors had more money invested in U.S. index funds than actively managed ones beginning in 2024, and the gap has only grown since then.
What are indexes? They're things the investment industry has created to answer the question: What is the market doing? It's otherwise tough to answer quickly when the U.S. market has thousands of stocks moving in different directions at any moment. The S&P 500 is perhaps the most famous and influential index. It tracks 500 of the biggest U.S. stocks, and trillions of dollars in investments are either directly mimicking it or at least benchmarking themselves against it. The Dow Jones Industrial Average is well known because it's been around since the 19th century, but it tracks only 30 big stocks so Wall Street pays it little attention.
Because index funds are the way so many investors put money into the stock market, companies want to be part of indexes. Stocks can see a big jump in their prices after S&P Dow Jones Indices, Nasdaq, FTSE Russell or other companies announce they'll be joining their indexes.