The move, announced yesterday, sent shares jumping by $1.66 to $35 at the end of trading on the New York stock Exchange, as analysts acknowledged the implementation of tough cost restructuring plans.
Last year shares peaked at $47.50 in January and dipped to a low of $29.98 in October.
Inclusion in S&P's 500 Index is often acknowledged as an indication of increasing confidence in a company's financial performance. Trading companies often use the Index as a reference, quickly buying up shares in companies that are newly listed.
Estee Lauder has had a difficult year, with financial results reflecting tough trading conditions, particularly in the US market. But moves to counterbalance the conditions have been well received, suggesting that 2006 will be a better year.
The US-based company makes a range of high-end cosmetic, fragrance and hair care brands sold in over 130 countries, but still derives 55 per cent of its net sales from the Americas region.
In the financial year ending September 2005, the company announced that net earnings were down from $95.7 million in 2004, to $61.8 million. On the back of this performance the company announced that it was selling its Stila color cosmetics business. At the time it said that its other cosmetics brands, including Bobbi Brown and MAC, were already well positioned on the market.
The company also announced further plans for its cost restructuring program, including streamlined process and organizational changes and 'aggressive' reduction of indirect procurement and non-critical spending.
The company is counting on these measures bringing about a considerable turn around in its performance during the course of 2006, and expects that the measures should deliver cost savings of $40 - $45 million on trading up to June this year.
Back in September Estee Lauder said that it expected currency translation to negatively impact sales results by approximately 1 per cent, while expenses relating to closures and over-stocking were expected to hit the bottom line by up to 10 per cent in 2006.