Major indices like the S&P 500 or the Dow Jones Industrial Average use market cap as a primary criterion for inclusion. Many mutual funds and ETFs (Exchange-Traded Funds) are market-cap weighted, meaning they invest more money into companies with larger market caps. If a company's market cap grows, it gains more influence over the index's movement.
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Major indices like the S&P 500 or the Dow Jones Industrial Average use market cap as a primary criterion for inclusion. Many mutual funds and ETFs (Exchange-Traded Funds) are market-cap weighted, meaning they invest more money into companies with larger market caps. If a company's market cap grows, it gains more influence over the index's movement.