Feb 26, 2024 - Economy

How Walmart ushered Amazon into the Dow

Illustration of a stock market chart with a door that reads in and one that reads out

Illustration: Sarah Grillo/Axios

Actions have consequences — and a slightly weird stock split from Walmart turns out to have finally been the event that caused Amazon to enter the Dow Jones Industrial Average.

Why it matters: Two separate stock splits were necessary for Amazon to enter the Dow. Its inclusion now means a bit more representation for mega-caps, although Nvidia, Alphabet, Meta, and Berkshire Hathaway are all still missing.

How it works: Stocks in the Dow are weighted by their nominal share price, not their market value.

  • When Walmart did its 3-for-1 stock split, I worried that the action didn't "seem to make a lot of sense — especially given that the split is going to significantly dilute Walmart's contribution to the Dow Jones Industrial Average."
  • Turns out, S&P Dow Jones Indices, which administers the Dow, had the same worry. To maintain a sensible level of consumer retail in the average, they needed another stock alongside Walmart.
  • Helpfully, Amazon had done its own stock split back in 2022. Before then, its shares were trading at almost $3,000 each, effectively making the company ineligible for the Dow. Now, however, Amazon shares are trading at about $175 apiece, which is well within the Dow range. (UnitedHealth Group, also in the Dow, trades for more than $500 per share.)

The bottom line: The Dow is silly.

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