Amazon to replace Walgreens in Dow Jones Industrial Average

Amazon in Dow Jones Industrial Average: Amazon opens new tab is set to join the Dow Jones Industrial Average, replacing Walgreens Boots Alliance (WBA.O), opens new tab effective next week, S&P Dow Jones Indices said on Tuesday.

Shares of Amazon rose 1.3 per cent in extended trade after the announcement, while Walgreens dipped 3 per cent. Adding Amazon will increase consumer retail exposure as well as other areas in the Dow, and the move was prompted by Walmart's (WMT.N), opens new tab decision to split its stock, S&P Dow Jones Indices said in a news release.

The Dow, which debuted in 1896, is widely followed by retail investors, making it an important reflection of the US stock market. Institutional investors more frequently benchmark their performance against the S&P 500 (.SPX), opens new tab.

As well as dominating online retail, the Seattle company is a major player in cloud computing, entertainment and other industries. "Amazon is almost a hybrid name. It's one of the names that falls into different categories. It in many ways exemplifies what the Dow stands for in terms of representing commerce across the United States," said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina.

The change takes effect at the open of trading on Monday. Walmart will remain part of the Dow, although its upcoming three-for-one stock split, effective after market close on Friday, will reduce that retailer's weight in the index.

The Dow is weighted based on the share prices of its components, not on each company's overall market value. Additionally, Uber Technologies (UBER.N), opens new tab will join the Dow Jones Transportation Average (.DJT), opens new tab, replacing JetBlue Airways Corp (JBLU.O), opens new tab, giving that index exposure to the ride-hailing industry, S&P Dow Jones Indices said.

Amazon's addition to the Dow is the first since 2020, when Salesforce (CRM.N), opens new tab, Amgen (AMGN.O), opens new tab and Honeywell International (HON.O), opens new tab replaced Exxon Mobil (XOM.N), opens new tab, Pfizer (PFE.N), opens new tab and Raytheon Technologies.

Walgreens joined the Dow in 2018, replacing General Electric (GE.N), opens new tab.