Amazon to Join Dow Jones Industrial Average, Replacing Walgreens Boots Alliance
Next week, Amazon is set to make its debut in the prestigious Dow Jones Industrial Average, replacing Walgreens Boots Alliance on the thirty-stock index. The Dow Jones Industrial Average, consisting of 30 companies from the S&P 500, relies on a committee’s subjective decision-making rather than quantitative rules to determine which corporations best represent the U.S. economy. This selection process takes into account company growth, investor interest, and a diverse range of industries.
When it comes to the Dow, share price plays a significant role in determining a company’s ranking within the index. Fluctuations in stock prices or events like stock splits can have an impact on a firm’s position. With Walmart’s impending stock split set to lower its ranking, the addition of Amazon is seen as a step towards achieving balance, especially within the retail sector.
Since its inception in 1896, the composition of the Dow has changed over 50 times. It began with industries like sugar and tobacco but has now evolved into its current form. Notably, some well-known entities like Alphabet (Google’s parent company) have never been included. The committee exercises caution to avoid adding stocks at their peak value.
Being included in or removed from the Dow holds significant weight as an indicator of a company’s status and its ability to innovate and withstand the test of time. Walgreens, which had replaced General Electric in the Dow back in 2018, now sees its tenure come to an end as Amazon steps in to take its place, solidifying its influence in the global market.
Analyst comment
Positive news. Analyst: The addition of Amazon to the Dow Jones Industrial Average is seen as a positive move, bringing balance to the retail sector. This highlights Amazon’s influence and strengthens its position in the global market.
