The US stock market, which has seen high volatility due to recent banking concerns, reclassified its sector after Friday's close.
The revisions mean "significant changes" for the financial and technology sectors as several S&P 500 stock sectors changed, according to a BofA Global Research note published earlier this month. Following the shift to the Global Industry Classification Standard, or GICS, the financial sector could become a "newly crowded sector," Bank of America's equity and quantitative strategists said in a March 7 note.
See: Why financials could become the 'new hustle' sector after the upcoming stock market ranking change
S&P Dow Jones and MSCI announced almost a year ago that their GICS review would be done after the close of EST business on March 17.
Jefferies predicted in a March 7 research note that the changes would reduce the weighting of the technology sector in the S&P 500 from 27.18% to 24%, while financials would fall from 11.75% to 14.5%.
Among companies moving from IT to the financial sector is Visa Inc. MasterCard. and PayPal Holdings Inc. According to a memo from BOFA.
The technology sector has outperformed financial stocks so far in 2023.
The SPDR Selected Technology Sector ETF is up 15.3% this year on Friday, while the SPDR Selected Finance ETF is down 9.4%, according to FactSet data. The performance of these two sectors compares with the SPDR S&P 500 ETF's gain of 2% over the same period through 2023.
Meanwhile, investors are looking at fears of igniting stress in the financial sector after the recent failure of a regional bank in the US prompted the government to intervene. Investors are also worried about banking problems in Europe, where UBS Group last weekend agreed to take over troubled Credit Suisse Group.
The Federal Reserve will hold a two-day policy meeting this week, ending Wednesday, as investors watch whether the Fed will continue to raise benchmark interest rates to fight inflation after the banking crisis triggered emergency measures to help banks on March 12. Meet the needs of depositors.
Read: What's at stake for stocks and bonds as the Fed compares banking chaos to fighting inflation
U.S. stock markets traded higher Monday morning, with the S&P 500 up 0.7%, the Dow Jones Industrial Average up 1.1% and the Nasdaq Composite Index up 0.2%, according to FactSet data.
The S&P 500 financial index was up 1.7% early Monday, while the information technology index was down 0.3%, according to FactSet data.