S&P Cuts Market-Value Guidelines for U.S. Indexes

By Chan Tien Hin

Sept. 26 (Bloomberg) -- Standard & Poor's cut the market- value ranges for inclusion in its three main U.S. indexes after this year's rout wiped $1.8 trillion off the nation's shares.

Companies that join the Standard & Poor's 500 Index must be worth $4 billion or more, it said in a statement yesterday, down from at least $5 billion. The S&P MidCap 400's range was lowered to between $1 billion and $4.5 billion from $1.5 billion to $5.5 billion earlier. The changes became effective yesterday.

The S&P SmallCap 600 guideline is now $250 million to $1.5 billion, compared with $300 million to $2 billion before.

The S&P 500 is down 18 percent this year on concern more than $521 billion in credit losses and writedowns at financial firms globally and a slowing economy are curbing profits.

U.S. economic growth may slip to 1.7 percent this year and 1.5 percent in 2009, the slowest since the last recession in 2001 and its aftermath in 2002, according to the median of 80 economist forecasts compiled by Bloomberg.

The S&P 500 Index has 154 industry groups, with the Thrifts & Mortgage Finance Index being the worst performer this year, down 82 percent, led by Washington Mutual Inc. The Investment & Brokerage Index is down 50 percent.

Standard & Poor's last changed its market-value guidelines in July 2007 when it raised the ranges for the three main U.S. indexes.

S&P, a unit of New York-based McGraw-Hill Cos., uses the figures as guidelines, not requirements, for index inclusion.

To contact the reporter on this story: Chan Tien Hin in Kuala Lumpur thchan@bloomberg.net.