The blue-chip index makes its first significant component change since 2013
The week started with some changes for one of the most important American indices – USA30 (Dow Jones Industrial Average 30). The index representatives announced a shake-up, as they will switch out three stocks for the second time in a decade, and the third time in a millennium. The last time when a replacement took place was in 2013 when Alcoa, Bank of America, and Hewlett-Packard have been replaced by Goldman Sachs, Nike, and Visa.
The new companies that will be part of USA30 are Salesforce.com, Amgen, and Honeywell International. To make room for the new companies, others will have to leave the index. Those who will leave USA30 are Exxon Mobil, Pfizer, and Raytheon Technologies.
#Apple's decision to do a 4-for-1 stock split made the change possible. By this, the benchmark’s exposure to the information technology sector diminished from 27.6% to 20.3%. Salesforce.com’s inclusion will bring the technology within the #DJIA to 23.1%.
The changes will happen on August 31, before the opening bell.
From the specialists' point of view, the swap shows the changing picture of the market. Also, it "help(s) diversify the index by removing overlap between companies of similar scope and adding new types of businesses that better reflect the American economy," read the statement from Dow Jones.
Since March 23, USA30 has gained roughly 55%. It’s still 4% under its all-time high of 29,568.57 reached on February 12. Following the announcement, shares of Exxon, Pfizer, and Raytheon lost about 2%. Their replacements gained 4%.
Year to date, Salesforce.com share gained 28%, Amgen’s lost 2.3%, and Honeywell stocks are down 10%.
Sources: marketwatch.com, cnbc.com