In its biggest reshuffle in several years, the Dow Jones Industrial Average is removing its longest-serving member: Exxon Mobil Corp.
The change was prompted by Apple’s forthcoming split, set to happen at Friday’s market close, which will leave the stock at one-quarter of its current price, Bloomberg News reported.
As opposed to the market-cap-weighted S&P 500 index, the Dow weights its members by price rather than market value. If a stock’s price falls too much, it can have a notable impact on the 124-year old index, according to Barrons.
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The blue-chip Dow will replace Exxon Mobil with the cloud-based software company Salesforce. Founded in 1999, Salesforce’s stock has risen 27-fold since March 2009, according to Bloomberg News.
Energy giant Exxon Mobil, the oldest member of the index, joined the Dow in 1928 as Standard Oil of New Jersey. The Dow’s last original member, General Electric, was removed in 2018, CBS News reported.
While Exxon Mobil was worth more than $450 billion as recently as 2014, according to Bloomberg News, the stock had fallen throughout the six years before 2020 and is down another 40 percent since January.
Boosted by the COVID-19 lockdowns, technology companies have surged this year. In July, Amazon founder and chief executive officer Jeff Bezos saw his fortune grow by $13 billion in one day.
Also leaving the index, effective Monday, is drug company Pfizer and airplane and defense contractor Raytheon Technologies, which are being replaced by biotech Amgen and manufacturing conglomerate Honeywell, CBS News reported.
The last time three companies were added to the Dow was seven years ago, Bloomberg News reported. Visa Inc., Goldman Sachs Group Inc. and Nike Inc. replaced Bank of America Corp., Hewlett-Packard Co. and Alcoa Inc.
Although the Dow’s influence has faded over the years, according to Bloomberg News, it remains a high profile equity gauge with around $31.5 billion of assets.