Can Amazon Save the Dow?

MicroStockHub / iStock via Getty Images Inc. (NASDAQ: AMZN) is up 80% in the past year. If that continues, it might help the Dow Jones industrial average, a group it just joined. Amazon replaced Walgreens Boots Alliance Inc. (NASDAQ: WBA). Dow stocks tend to be “old economy” stocks. Maybe that is why it has risen only 19% in the past year, while the S&P 500, dominated by mega-cap tech shares, is up 28%. It included every major tech company. The Dow includes only Apple Inc. (NASDAQ: AAPL), Salesforce Inc. (NYSE: CRM), Microsoft Corp. (NASDAQ: MSFT), and Intel Corp. (NASDAQ: INTC). But Salesforce is not a major tech company, and Intel fell off the list of successful tech stocks over two years ago. It is a wonder the two companies are on the list instead of Alphabet Inc. (NASDAQ: GOOGL) or Nvidia Corp. (NASDAQ: NVDA).

Among the 30 components of the Dow are companies over a century old and many have not contributed to the stock market’s rise or fall for decades. Old world conglomerate 3M Co. (NYSE: MMM) has a market cap of $50 billion. Earthmover company Caterpillar Inc. (NYSE: CAT) is part of the disappearing age of combustion engines. Its market cap is $125 billion, a tiny fraction of companies like Microsoft and Nvidia. International Business Machines Corp. (NYSE: IBM) is also one of the Dow stocks. It fell into tech obscurity decades ago. Its market cap is $168 billion. (See which 25 American industries are booming.)

Ned Davis Research Chief U.S. Strategist Ed Clissold told CNBC, “Adding a Tech Titan could help keep the most widely known equity benchmark relatable to investors.” However, that is not the answer. Why have a significant index with too few major companies? The group that decides on the 30 Dow stocks has driven it into obscurity.


Essential Tips for Investing: Sponsored

A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.