According to S&P Dow Jones Indices, a division of S&P Global, Walgreens Boots Alliance Inc. (WBA) - Get Walgreens Boots Alliance Inc Report will replace GE, effective prior to the open of trading on Tuesday, June 26. GE was an original member of the index in 1896 and a member continuously since 1907, S&P said.
"Since then the U.S. economy has changed: consumer, finance, healthcare and technology companies are more prominent today and the relative importance of industrial companies is less," said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices. "Today's change to the DJIA will make the index a better measure of the economy and the stock market."
GE said it is "focused on executing against the plan" it has laid out to improve the company's performance. "Today's announcement does nothing to change those commitments or our focus in creating a stronger, simpler GE," the company said via email to TheStreet.
"It definitely puts an exclamation point as to the severity of the problems at GE, which have been based on the past five to ten years of management," top GE analyst Robert McCarthy at Stifel Financial told TheStreet. McCarthy rates GE at a hold.
Walgreens rose 3.7% in pre-market trading. GE fell 3.6%.
Said William Blair analyst Nicholas Heymann, "GE's stature as a predictive component of the DJIA has steadily declined over the past decade, and thus the change could be viewed as long overdue." Heymann hinted the decision could mean GE's worst news is coming to an end.
"The peculiar replacement of Walgreens for General Electric reminds me of the Nancy Sinatra song 'These Boots Were Made for Walkin,' and not in a good way," McCarthy said, adding that it marks a "sad day" for the industrial icon.
Watch added analysis from TheStreet below.