Facebook to join S&P 500

Standard & Poor's on Wednesday said Facebook Inc will join its S&P 500 stock index after the close of trading on December 20, cementing the social media network's rise into one of the biggest, most powerful U.S. companies.

The decision follows Facebook reporting its fourth straight profitable quarter in October, one of the criteria that S&P uses to determine eligibility for the index.

Facebook shares rose 4.3 per cent to $51.51 following S&P's announcement after regular market hours. Shares often rise after a company is tapped for inclusion in the S&P 500, because many investors track the index and buy shares of companies that enter it.

The Menlo Park, California-based company's shares had closed Wednesday down 87 cents at $49.38, about 30 per cent above their $38 initial offering price in May 2012, and giving it a roughly $121 billion market value, Reuters data show.

S&P said on December 20 it will also add marketing solutions company Alliance Data Systems Inc and floor covering company Mohawk Industries Inc to the S&P 500, and remove Abercrombie & Fitch Co, JDS Uniphase Corp and Teradyne Inc. Facebook will also replace Williams Cos in the S&P 100 index of large U.S. companies. Williams will remain in the S&P 500.