In a significant shake-up of the Dow Jones Industrial Average (DJIA), e-commerce giant Amazon is set to replace drugstore operator Walgreens Boots Alliance on the prestigious index before Monday’s opening of trading, according to an announcement from S&P Dow Jones Indices.
The Dow, one of the oldest and most trusted stock indexes in the United States, is renowned for reflecting the performance of large, well-established companies, with a history dating back to its debut in 1896. Amazon will include it alongside industry titans like Microsoft, Apple, and Disney.
The decision to replace Walgreens with Amazon comes in response to Walmart’s recent 3-to-1 stock split, which will reduce Walmart’s stock weighting in the index. The Dow is a price-weighted index, meaning higher-priced stocks carry more weight. Seattle-based Amazon will officially join the Dow on the same day as Walmart executes its stock split.
“Reflecting the evolving nature of the American economy, this change will increase consumer retail exposure as well as other business areas in the DJIA,” stated S&P Dow Jones Indices.
The shuffle will impact the weightings of Dow stocks, with Amazon’s weight ranking 17th out of the 30 stocks in the index once the transition is complete. Walmart’s weighting will drop from 17 to 26, while UnitedHealth Group will retain its position as the most heavily weighted stock on the index.
In addition to Amazon’s inclusion, ride-sharing service Uber Technologies is set to debut on the Dow Jones Transportation Average, replacing JetBlue Airways. The move aims to expose the burgeoning ride-sharing industry to the index.
San Francisco-based Uber’s addition to the Dow Jones Transportation Average comes from JetBlue Airways’ diminished weight in the index due to its low share price. S&P Dow Jones Indices made these announcements after the closing bell, resulting in a positive after-hours trading response. Amazon shares rose 1.4%, while Uber’s stock gained 1.1%.
As the DJIA undergoes these changes, market analysts will closely monitor the impact on the index’s dynamics, providing investors with insights into the evolving landscape of the American economy.
