Investing.com -- Datadog Inc . (NASDAQ: DDOG ) stock surged 8.5% after S&P Dow Jones Indices announced the cloud monitoring company will join the S&P 500 index , effective prior to market open on Wednesday, July 9.

The New York-based software firm will replace Juniper Networks Inc . (NYSE: JNPR ) in the benchmark index following Juniper’s acquisition by Hewlett Packard Enterprise Co . (NYSE: HPE ), which was completed on July 2.

Inclusion in the S&P 500 typically drives significant demand for a company’s shares, as index funds and ETFs tracking the benchmark must purchase the stock to maintain accurate portfolio representation. This forced buying often leads to price appreciation, as evidenced by Datadog’s strong performance following the announcement.

Meanwhile, expected contenders for the S&P spot dropped, with Robinhood Markets Inc (NASDAQ: HOOD ). falling 2.7% and AppLovin (NASDAQ: APP ) Corp. dropping 2.5% during the aftermarket trade.

Datadog, which specializes in monitoring and security platforms for cloud applications, has established itself as a leader in the observability space, providing solutions that help companies track their digital infrastructure performance.

The company’s addition to the S&P 500 represents a milestone in its growth trajectory since going public in 2019, reflecting its increased market capitalization and liquidity.

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