The Dow Jones Industrial Average Is Changing: What Does It Mean For You?

“To some degree, the impact on the Dow of the split is similar to profit taking, since the gains are locked in and then reallocated into the portfolio,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, in an email to Forbes Advisor. , aka the Dow, is an index of 30 of the largest companies in the United States that’s used as a barometer for the wider stock market as a whole.

The Dow, then, is weighted by the price of a stock rather than its market capitalization, a metric used by the Dow’s biggest rivals the To compensate, the Dow is replacing Exxonmobil with software company Salesforce.com. Exxon gained admission to the Dow as Standard Oil of New Jersey when it expanded to 30 companies back in 1928. With Exxon’s exit, Chevron , which was added in 1924 as Standard Oil of California, now becomes the sole representation of the energy sector.

“The bottom line is that the marketplace is always changing, and market barometers need to change with it,”. “Each of the changes reflects the environmental changes of the economy and is not intended as a buy-sell indicator, but as a ‘that’s the way it is’ reflection of the market.”

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