Amazon will join the Dow Jones Industrial Average while Walgreens is seeing its way out: Here’s all about it

Amazon will replace Walgreens Boots Alliance in the Dow Jones Industrial Average before trading begins on February 26th, marking the first change in the 30-stock index since 2020.

S&P Dow Jones Indices, which maintains the index, stated on Tuesday that the move is meant to reflect “the evolving nature of the American economy” by expanding the Dow’s consumer retail exposure.

This is the first update to the Dow Industrials since August 2020, when Salesforce, Amgen, and Honeywell International joined the index, replacing Exxon Mobil, Pfizer, and Raytheon Technologies (now RTX).

Amazon shares jumped 1.3% in extended trading on the announcement, while Walgreens fell 3%.

Amazon’s admission into the Dow Jones Industrial Average was made possible by a 20-for-one stock split in 2022, which resulted in a stock price that was low enough to be included in the price-weighted index.

Amazon is the third business from the “Magnificent Seven,” a group of high-performing tech equities, to enter the Dow 30 after Apple and Microsoft. The remaining four businesses in the group—Meta, Nvidia, Tesla, and Alphabet—are not included in the index, although all seven equities are included in the much bigger S&P 500 index.

The Dow, which debuted in 1896, is closely watched by ordinary investors, making it an essential indicator of the US stock market. Institutional investors commonly compare their performance to the S&P 500.

In addition to dominating online shopping, the Seattle corporation is a big player in cloud computing, entertainment, and other fields.