Amazon to Join Dow Jones Industrial Average, Replacing Walgreens Boots Alliance
In a move that reflects the evolving nature of the American economy, Amazon.com Inc. is set to join the prestigious Dow Jones Industrial Average (DJIA). This announcement comes as S&P Dow Jones Indices announced that Amazon will replace Walgreens Boots Alliance Inc. in the index.
The decision to include Amazon in the DJIA was prompted by Walmart Inc.’s recent 3-to-1 stock split. S&P Dow Jones stated that this change will increase consumer retail exposure, as well as expand representation in other business areas within the index.
This move is significant for Amazon, as it solidifies the company’s position as a major player in the American economy. After the news broke, Amazon’s stock rose by 1.3% in after-hours trading, indicating investor confidence in the company’s future prospects.
Meanwhile, Walgreens Boots Alliance Inc. experienced a drop of 3% in its share price following the announcement. This change in the DJIA composition highlights the shifting dynamics within the retail sector, with traditional brick-and-mortar stores facing increasing competition from e-commerce giants like Amazon.
In addition to Amazon’s inclusion in the DJIA, S&P Dow Jones also announced another change in the index composition. Uber Technologies Inc. will replace JetBlue Airways Corp. in the Dow Jones Transportation Average (DJT). This change is set to take effect on February 26th.
S&P Dow Jones stated that this change will allow the index to gain exposure to the ride-sharing industry, which has seen significant growth and disruption in recent years. The decision to replace JetBlue was influenced by its low weight in the index, caused by its low share price. The DJT is a price-weighted index, and JetBlue’s limited representation did not align with the index’s objectives.
JetBlue, however, has been actively pursuing opportunities within the airline industry. The company has appealed a court ruling that blocked its merger with Spirit Airlines Inc., as it aims to gain a foothold in the ultra-low-cost airline industry and domestic leisure travel. JetBlue is also appealing a decision that prevented its regional alliance with American Airlines Group Inc.
These changes in the DJIA and DJT composition reflect the dynamic nature of the American economy. As industries evolve and new players emerge, indices like the DJIA and DJT must adapt to accurately represent the market landscape.
In conclusion, Amazon’s inclusion in the DJIA and Uber’s addition to the DJT mark significant shifts in the composition of these indices. These changes reflect the changing face of the American economy, with e-commerce and ride-sharing gaining prominence. As investors eagerly await the implementation of these changes on February 26th, it is clear that the Dow Jones indices are evolving to stay relevant in an ever-changing market.