The stock of Google parent company Alphabet (GOOGL) is being added to the blue-chip Dow Jones Industrial Average.
S&P Global (SPGI), which manages the Dow index, said Alphabet’s stock will replace Verizon (VZ), which is being removed after 22 years.
The Dow Jones Industrial Average is comprised of 30 stocks that, together, are meant to provide a snapshot of the U.S. economy.
Alphabet’s A shares, which trade under the ticker symbol “GOOGL,” will join other mega-cap technology stocks already in the Dow such as Nvidia (NVDA), Amazon (AMZN), Apple (AAPL), and Microsoft (MSFT).
S&P Global has been trying to modernize the Dow in recent years and ensure it reflects the current state of the U.S. economy.
Adding Alphabet to the index will provide it with exposure to themes such as artificial intelligence (A.I.), cloud infrastructure, and online advertising.
Being added to an index such as the Dow is usually positive for a stock as mutual funds and exchange-traded funds (ETFs) that track the index are required to buy the shares.
GOOGL stock is up 1% on news it is being added to the Dow. So far this year, Alphabet’s shares have gained 10% to trade at $346.08 U.S.
Telecommunications firm Verizon’s stock is down 17% over the past five years and its shares had represented only one-half of a percentage point in the Dow 30 index.
The Dow is a price-weighted index, meaning that each stock in it is weighted based on its share price. As a result, a company with a higher share price has more impact on the overall index.
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