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Amazon Joins Dow Industrial Stocks

The upcoming week marks the inclusion of e-commerce giant Amazon.com into the esteemed roster of the Dow Jones Industrial Average, taking the place of Walgreens Boots Alliance.

According to S&P Dow Jones Indices, the move is a result of the revamping of the index, wherein 13 stocks under Walmart are being restructured to reflect the evolving US economy.

The inclusion of Amazon into the index will lower its weight in the index as well as reduce the influence of consumer staples stocks.

The method used to calculate the index is a sum of 30 individual stock prices, with adjustments made for stock splits and new additions. Companies with higher stock prices have a greater impact on the index, regardless of their total market value.

In recent years, technology stocks have outperformed the Dow Index, with the index rising by approximately 50% in the past five years. This growth has been overshadowed by both the S&P 500 Index and the Nasdaq.

Walgreens Boots Alliance, included in the index in 2018, has seen fluctuating stock performance within the Dow Industrial Stocks, hitting a low in 2019 and then performing well in 2023.

Due to decreased demand for new products and vaccines, impacting revenue, Walgreens announced a cut in dividend stocks last month.

Amazon’s addition to the Dow Jones Industrial Average reflects the company’s strong impact and high value in the stock market. The company’s recent success in the consumer e-commerce sector has sustained its positive momentum despite the prevailing pandemic, while its artificial intelligence advances have contributed to its sales department efficiency.

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Since the beginning of 2023, Amazon’s stock price has risen to almost double, surpassing a market value of $1.7 billion.

Aside from Amazon, Boeing and Salesforce are the only other three companies to join the exclusive list of 30 industrial stocks. In terms of the company’s weight and influence on the index, Amazon will be ranked 17th, while Walmart will be relegated from 17th to 26th. UnitedHealth Group will remain at the top of the list.

The Dow Jones Market Data reports that UnitedHealth Group currently holds a 9% weight on the Dow index. Microsoft and Goldman Sachs closely follow with approximately 7%, while Walgreens Boots Alliance holds the lowest weight at around 0.4%. Verizon Communications’ weight is at 0.7%, and Intel is at 0.8%, ranking second and third lowest, respectively.

The last adjustment of additions to the stock was made in August 2020. Salesforce, Amgen, and Honeywell International replaced Exxon Mobil, Pfizer, and Raytheon Technologies. This change was initiated due to Apple’s stock split.

A committee responsible for the Dow Jones Indices decides the addition of stocks to the index, selecting companies that are highly reputable and of significant interest to investors.

As demand shifts, companies must be adjusted or meet certain qualifications to be included in the list of Dow Industrial Stocks. Companies included in the Dow Jones Industrial index represent public affairs and lead sectors excluded from other indices.

The Dow Industrial Average, developed by Charles Dow, aims to help readers interpret market trends and was initially published daily in the Wall Street Journal, starting in 1896. Early versions of the index principal focus were published by the Dow Jones & Co. founder, Charles Dow, in 1884.

In the coming months, it is expected that Amazon’s inclusion in the index will continue to have a significant impact on the stock market, reflecting the company’s strong influence and high market value.

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