(Bloomberg) -- Amazon.com Inc. will replace Walgreens Boots Alliance Inc. in the Dow Jones Industrial Average, according to a press release from S&P Dow Jones Indices.
The index change, which was announced after the market close on Tuesday, was prompted by Walmart Inc.'s decision to split its stock 3-to-1, the index provider said in the release. The latter move will reduce Walmart's index weight due to the price weighted construction of the 30-stock Dow. Walmart will remain in the index. The change will go into effect prior to the open of trading on Monday, Feb. 26.
“It certainly has been a long time coming for a major change in the Dow Jones Industrial Average. If any company represents the US economy better than Amazon, I don't think we found it yet,” said Art Hogan, chief market strategist at B. Riley Wealth. “It replaces another consumer facing company, so the balance of the index remains the same.”
The e-commerce giant's inclusion in the index is another milestone in the retailer's rapid expansion in the last decade. The company, founded in 1994 as an online bookseller, now famously sells all sorts of goods and runs the world's largest cloud-computing business. The Seattle-based company is the second-largest private sector employer in the US behind Walmart.
“Reflecting the evolving nature of the American economy, this change will increase consumer retail exposure as well as other business areas in the DJIA,” the index provider said in the press release.
Meanwhile, Uber Technologies Inc. will replace JetBlue Airways Corp. in the Dow Jones Transportation Average, according to the release.
Shares of Amazon rose 1.5% in extended trading after the news, while Walgreens fell over 3%. Uber gained 1%, while JetBlue was down 0.4%.
More than a century after its founding, the Dow has ceded its preeminence as an investor benchmark, though it remains the most exclusive register of American corporate elites. As such, its additions and deletions are a litmus for industry trends.
The 20-stock, price-weighted Dow Transportation index includes the largest US companies within the industry group, according to the index provider. The move — prompted by JetBlue's low weighting — will help the gauge gain exposure to the ride-sharing industry, it said.
(Updates share prices, adds context thoughout, including on Uber's addition)
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