Shares of Google ( GOOG), which have jumped 6% since last week's announcement of its inclusion in the S&P 500, slumped 2% Thursday on news of the company's plans to sell an additional $2 billion in stock.

Last night, Google said it would sell 5.3 million shares to accommodate demand from index funds buying them for their portfolios. Google will join the S&P 500 after the close of trading Friday. The proceeds from its share sale will be used for "general corporate purposes, including working capital and possible acquisitions of complimentary businesses, technologies and other assets," according to Google's registration statement with the Securities and Exchange Commission.

Google certainly doesn't need the money, since it already has about $8 billion in cash on its balance sheet. In addition, the Mountain View, Calif.-based company just raised $4 billion in September. Wall Street doesn't expect the money to remain idle.

"Eight billion is quite a war chest, and the fact that it is adding to it will add to the speculation that it is in the hunt for a major acquisition," says Tim Ghriskey, chief investment officer of Solaris Asset Management, which has recently sold its position in Google.

Figuring out what Google will do will be a challenge, as the company doesn't give earnings guidance or much else in the way of specific information about its operations. Until now, the company has tended to purchase small companies such as the start-up Upstartle, which makes the Writely word processing program. The company did invest $1 billion for a 5% stake in Time Warner's ( TWX) America Online.

Google might be interested in acquiring Facebook , a college social networking site that BusinessWeek reported earlier this week is trying to sell itself, says Needham & Co. analyst Mark May, who rates the shares as a buy. Google's own social networking efforts have failed to catch on. Facebook has declined to comment on the BusinessWeek story.

"Some investors think Google could use the proceeds toward investment in Asian Internet companies, broadband, college social networking and PC distribution (i.e. toolbars for Dell)," writes Bear Stearns analyst Robert Peck, in a note to clients today. He rates the shares outperform and his company has provided noninvestment banking work for Google in the past 12 months. "We think that those moves could be made without raising $2 billion."