The Dow Jones Industrial Average has excluded the stocks of oil giant Exxon Mobil, pharmaceutical conglomerate Pfizer, and weapons manufacturer Raytheon from its stock index. The Dow Jones index has long been regarded as a benchmark indicator of the state of the American financial markets, although it includes stocks from only 30 companies and is weighted by their price rather than market capitalization.
In contrast to the Dow Jones, the S&P 500 index includes stocks from many more companies and is weighted by their market capitalization, making it considered more representative. Inclusion in both indices can bring significant benefits to companies given the efforts of investment funds to reach or exceed the average index values, explains dpa.
Thus, rumors that the inclusion of electric vehicle manufacturer Tesla in the S&P 500 index was being considered were one of the factors that influenced the rise in its stock price, the agency notes. Exxon Mobil was included in the Dow Jones in 1928, Pfizer in 2004, and Raytheon in April of this year.
S&P Dow Jones, the company that manages the Dow Jones, states that the trigger for the decision to exclude Exxon, Pfizer, and Raytheon and include Amgen, Salesforce, and Honeywell was the announced stock split of Apple. If the composition of the index had not been changed, the split would have reduced the impact of the information technology sector on its value, writes the Wall Street Journal on Monday.
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