Amazon is joining the Dow Jones Industrial Average

Amazon.com is officially joining the blue chips. The online retail powerhouse will be included in the venerable Dow Jones Industrial Average at the start of trading Monday, replacing Walgreens Boots Alliance.

- Hannah Miao

S&P Dow Jones Indices, which manages the 30-stock benchmark, said the changes were prompted by Walmart's 3-for-1 stock split, which is also effective next week.

Unlike the S&P 500 and the Nasdaq Composite, the blue-chip index is weighted by share price, not by market capitalization. Walmart's split will reduce its weighting, and that of the consumer staples sector, in the index.

The Dow is calculated by adding the prices of the 30 stocks and dividing by a factor that accounts for changes like stock splits and index entrants. That means that companies with a higher share price have a greater effect on index moves, regardless of their total market value.

Walgreens' tenure in the index was relatively short-lived. It was added in June 2018, replacing General Electric. Its stock has struggled since then, losing more than two-thirds of its value, and was the Dow's biggest laggard in 2019 and 2023.

Faced with shrinking demand for Covid-19 tests and vaccines, the pharmacy chain is racing to make up for lost revenue. Walgreens slashed its quarterly dividend last month.