AMAZON is set to join the Dow Jones Industrial Average, replacing Walgreens Boots Alliance effective next week, S&P Dow Jones Indices said on Tuesday.

Shares of Amazon rose 1.3 per cent in extended trade after the announcement, while Walgreens dipped 3 per cent.

Adding Amazon will increase consumer retail exposure as well as other areas in the Dow, and the move was prompted by Walmart’s decision to split its stock, S&P Dow Jones Indices said in a news release.

The Dow, which debuted in 1896, is widely followed by retail investors, making it an important reflection of the US stock market. Institutional investors more frequently benchmark their performance against the S&P 500.

As well as dominating online retail, the Seattle company is a major player in cloud computing, entertainment and other industries.

“Amazon is almost a hybrid name. It’s one of the names that falls into different categories. It in many ways exemplifies what the Dow stands for in terms of representing commerce across the United States,” said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina.

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The change takes effect at the open of trading on Monday.

Walmart will remain part of the Dow, although its upcoming three-for-one stock split, effective after market close on Friday, will reduce that retailer’s weight in the index.

The Dow is weighted based on the share prices of its components, not on each company’s overall market value.

Additionally, Uber Technologies will join the Dow Jones Transportation Average, replacing JetBlue Airways Corp, giving that index exposure to the ride-hailing industry, S&P Dow Jones Indices said.

Amazon’s addition to the Dow is the first since 2020, when Salesforce, Amgen and Honeywell International replaced Exxon Mobil, Pfizer and Raytheon Technologies.

Walgreens joined the Dow in 2018, replacing General Electric. REUTERS