The online retail powerhouse, Amazon will be included in Dow Jones Industrial Average replacing Walgreens Boots Alliance, effective next week, S&P Dow Jones Indices said on Tuesday.
Shares of Amazon rose by 1.3 percent in extended trade as the announcement was made while Walgreen’s shares fell by 3 percent.
Addition of Amazon in Dow
Amazon’s addition to the Dow Jones Industrial Average will increase customer retail exposure as well as other areas. Walgreens’s decision to split its stock led to this move, S&P Dow Jones Indices said.
Dow is widely followed by retail investors making it an important reflection of the US stock market. Along with dominating online retail, it is a major player in cloud computing, entertainment, and other industries.
“Amazon is almost a hybrid name. It’s one of the names that fall into different categories. It in many ways exemplifies what the Dow stands for in terms of representing commerce across the US,” said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina.
Why is Walgreen being replaced?
The Dow is weighted based on share prices of its components like stock splits and index entrants and not on each company’s overall market value.
Walgreens was added to the Dow in June 2018, and its stocks have struggled since then, losing more than 2-3rd of their value. With shrinking demands for COVID-19 tests and vaccines, it was trying to make up for its lost revenue, in 2019 and 2023.
Amazon’s Performance
Amazon, on the other hand, has been among the stock market’s most dominant players. It showed a fast recovery from pandemic losses through its robust holiday online sales. And with the help of Artificial Intelligence, it showed good performance in its cloud-computing arm.
Since the beginning of 2023, Amazon’s shares nearly doubled, giving the company a market value of more than $1.7 tn.
Uber to join Dow
Uber Technologies will also be joining the Dow Jones Transportation Average, replacing JetBlue Airways Corp, S&P Dow Jones Indices said.
ALSO READ : Zomato aims to compete with Amazon and Flipkart – plans for Blinkit to deliver more