What happened

Shares of Lattice Semiconductor (LSCC 4.52%) soared today, up by 13% as of 1:40 p.m. EDT, after S&P Dow Jones Indices announced that the company would be joining the S&P MidCap 400 index. While the news has no bearing on Lattice's business fundamentals, it does create buying activity from index funds that track the underlying index, which are now obligated to purchase the stock.

So what

The dominant index provider is shuffling constituents for three different widely followed indexes, the S&P 500, the S&P MidCap 400, and the S&P SmallCap 600, all of which will become effective on Tuesday, April 20.

Stock chart going up

Image source: Getty Images.

In the S&P 500, PTC will be replacing Varian Medical Systems since Siemens just closed its acquisition of Varian Medical Systems and it is no longer a publicly traded stock. For the S&P MidCap 400, PTC and Domtar are being removed while Lattice Semiconductor and Progyny will be added to the mix. Domtar will take NIC's place in the S&P SmallCap 600.

Now what

As mentioned, index changes have no bearing on a company's business or financial performance, but typically trigger buying and selling activity as funds rebalance their portfolios. Lattice shares have hit all-time highs on heavy volume as those funds start accumulating positions ahead of the effective date.

Lattice is scheduled to report first-quarter earnings on May 4 and expects revenue to be in the range of $106 million to $114 million. Analysts are forecasting $110.1 million in sales.