Amazon.com will replace Walgreens Boots Alliance 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 Feb 20, was prompted by Walmart’s decision to split its stock 3-for-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 Dow. Walmart will remain in the index. The change will take effect prior to the open of trading on Feb 26.  

B. Riley Wealth chief market strategist Art Hogan said: “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.

“It replaces another consumer facing company, so the balance of the index remains the same.”

Amazon’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 United States, 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.

The Dow is weighted based on the share prices of its components, not on each company’s overall market value.

Additionally, Uber Technologies will join the Dow Jones Transportation Average, replacing JetBlue Airways, 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, Amgen and Honeywell International replaced Exxon Mobil, Pfizer and Raytheon Technologies.

Walgreens joined the Dow in 2018, replacing General Electric. BLOOMBERG, REUTERS