|
Listen now
|
Amazon is officially joining the Dow Jones Industrial Average at the start of trading Monday, succeeding Walgreens.
S&P Dow Jones Indices, which manages the 30-stock benchmark, said the changes were prompted by Walmart’s 3-for-1 stock split, which is also effective next week, and reflect the evolving nature of the U.S. economy.
Unlike the S&P 500 and the Nasdaq Composite, the blue-chip index is weighted by share price, not by market capitalization. Walmart’s split will reduce its weighting, and that of the consumer-staples sector, in the index.
The Dow is calculated by adding the prices of the 30 stocks and dividing by a factor that accounts for changes such as stock splits and index entrants. That means that companies with a higher share price have a greater effect on index moves, regardless of their total market value.
The Dow has lagged behind the S&P 500 and Nasdaq in recent years because it is less oriented toward technology stocks.
The blue-chip index has climbed about 50% over the past five years, while the S&P 500 has surged more than 75% and the tech-heavy Nasdaq has more than doubled.
Walgreens’s tenure in the Dow was relatively short-lived. It was added in June 2018, succeeding General Electric. Its stock has struggled since then, losing more than two-thirds of its value, and was the Dow’s biggest laggard in 2019 and 2023.
Faced with shrinking demand for Covid-19 tests and vaccines, the pharmacy chain is racing to make up for lost revenue. Walgreens slashed its quarterly dividend last month.
Amazon, on the other hand, has been among the stock market’s most dominant performers.
Amazon shares have nearly doubled since the beginning of 2023, giving the company a market value of more than $1.7 trillion.
 Follow the MoneyCentral Nigeria channel on WhatsApp: Click here!