Shares of Yahoo soared 67.25, or 23.95 percent, to close at a record 348. Volume was staggering, as more than 66 million shares changed hands.
By comparison, Yahoo's volume has ranged between 10 million and 16 million shares since the Nov. 30 announcement that it will be added to the widely followed S&P 500 index tomorrow.
"Yesterday's volume was strong, but today it's huge," said Andrea Williams, an analyst with E*Offering. "It seems that the news should have already been factored into the stock."
Indeed, it appeared that investors had already run up the stock. Yahoo shares closed at 280.75 yesterday, a gain of 32 percent since the S&P announcement last week.
Yahoo will replace Laidlaw, the largest school bus company in North America, on the S&P 500 index. Companies that are included in an index usually see their share price rise because index fund managers must buy the stocks to match the indexes' performance.
"I'm not sure if there is something else that's driving the stock," Williams said, noting that MMXI Europe, a joint venture between Media Metrix and media research companies in France and Germany, yesterday released favorable figures on Yahoo before the markets opened.
"They ranked Yahoo first in the U.K. and second in Germany and France," Williams said. "There is a lot of growth opportunity in Europe and other parts of the world. For Yahoo to be positioned ahead of the local services and AOL is good. Yahoo's European business is meaningful; it's over 10 percent of revenues."
Yahoo marks the second Internet company to be added to the S&P 500. Last year, America Online was added to the index. But unlike Yahoo, AOL shares rose only a slight 5 percent from the time of the announcement to the actual inclusion in the index.
Asked whether investors will be looking to take profits tomorrow, Williams said, "I would have thought they would have done it today."