Amazon to Replace Walgreens in Dow Jones Index

Amazon Stock

In a significant move, Amazon (NASDAQ:AMZN) is poised to join the prestigious Dow Jones Industrial Average, stepping in to replace Walgreens Boots Alliance (NASDAQ:WBA) effective next week, as confirmed by S&P Dow Jones Indices on Tuesday.

Following the announcement, Amazon’s shares surged by 1.3% in after-hours trading, contrasting with a 3% decline in Walgreens’ stock.

The decision to include Amazon in the Dow reflects a strategic shift, prompted by Walmart’s (NYSE:WMT) choice to split its stock, as outlined in a news release by S&P Dow Jones Indices. This adjustment is anticipated to enhance consumer retail exposure within the index, aligning with the evolving landscape of the U.S. stock market.

Founded in 1896, the Dow Jones Industrial Average holds considerable sway among retail investors, serving as a key barometer of the stock market’s performance. While institutional investors typically gauge their performance against the S&P 500 (.SPX), the Dow remains a widely followed benchmark.

Amazon’s diverse portfolio spanning online retail, cloud computing, entertainment, and other sectors positions it as a significant player across various industries. Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina, remarked that Amazon’s inclusion underscores its status as a versatile entity, embodying the essence of commerce in the United States.

The change in the Dow’s composition will take effect at the opening of trading on Monday. Despite Walmart retaining its position in the index, its forthcoming three-for-one stock split, scheduled after market close on Friday, will lead to a reduced weightage for the retailer.

It’s important to note that the Dow’s weighting is determined by the share prices of its constituents rather than their overall market capitalization.

Additionally, Uber Technologies (NYSE:UBER) is slated to join the Dow Jones Transportation Average (.DJT), replacing JetBlue Airways Corp (NASDAQ:JBLU), thereby providing the index exposure to the burgeoning ride-hailing industry, according to S&P Dow Jones Indices.

Amazon’s addition marks the first change to the Dow since 2020 when Salesforce (NYSE:CRM), Amgen (NASDAQ:AMGN), and Honeywell International (NASDAQ:HON) entered the index, replacing Exxon Mobil (NYSE:XOM), Pfizer (NYSE:PFE), and Raytheon Technologies.

Walgreens, which joined the Dow in 2018, took the place of General Electric (NYSE:GE).

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