GE to end its 111-year run in Dow companies
General Electric (GE), an original member of the Dow Jones Industrial Average (DJIA) in 1896 and a member continuously since 1907, will be removed from the stock index prior to the open of trading on June 26.
Walgreens Boots Alliance, a national retail drug store chain offering prescription and non-prescription drugs, will replace GE in the DJIA, S&P Dow Jones Indices said in a statement on Tuesday.
The DJIA is a price-weighted index, and the range of prices among its 30 constitutes matter.
“The low price of GE shares means the company has a weight in the index of less than one-half of one percentage point. Walgreens Boots Alliance’s share price is higher, and it will contribute more meaningfully to the index,” said the statement, noting that the replacement will help the index better represent the US market and economy.
At Tuesday’s close, shares of GE dropped 1.89 percent to 12.95 US dollars apiece, while shares of Walgreens Boots Alliance rose 0.72 percent to 64.61 dollars a share.
“The US economy has changed: consumer, finance, health care and technology companies are more prominent today and the relative importance of industrial companies is less,” David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, explained in the statement.
The change won’t disrupt the level of the index, and the divisor used to calculate the index from the components’ prices on their respective home exchanges will be changed prior to the opening on June 26, according to S&P Dow Jones Indices.