Thanks to Apple , the Dow Jones Industrial Average is getting a shakeup. Salesforce, Amgen, and Honeywell are being added while Exxon Mobil, Pfizer and Raytheon Technologies are being dropped.
The switch is a result of Apple’s four-for-one stock split. A lower Apple stock price means tech’s weighting in the Dow also declines. To offset that, Salesforce is being added to the mix.
Read more on Apple's stock split from the Apple Maven here.
With Exxon Mobil on its way out, Chevron will be the last energy company in the index.
The Dow is comprised of 30 of some of the most widely known companies. However, it’s a controversial market measure. Many argue it’s impossible to represent the stock market with so few companies.
Additionally, the Dow is a price-weighted index, meaning it’s affected by changes in stock prices. The S&P 500, on the other hand, is weighted by market capitalization. In the S&P 500, a company worth $500 billion, for example, has more weight than a company worth $50 billion, regardless of stock price. That's not the case with the Dow.
The Dow shakeup goes into effect Monday, Aug. 31, which is when Apple's stock split is taking place.
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