(Bloomberg) -- Amazon.com Inc. is finally joining the famous Dow Jones Industrial Average.

The e-commerce giant will replace Walgreens Boots Alliance Inc. in the 30-stock gauge, according to a press release from S&P Dow Jones Indices. The change will go into effect prior to the open of trading on Monday, Feb. 26.  

The shift, which was announced after the market close on Tuesday, was prompted by Walmart Inc.’s decision to split its stock 3-to-1, the index provider said in the release. Such a move will reduce Walmart’s index weight due to the price-weighted construction of the blue-chip index.

Unlike its counterparts the S&P 500 and the Nasdaq 100, the historic Dow index is weighted based on the share price of its holdings rather than their market capitalization.

“Reflecting the evolving nature of the American economy, this change will increase consumer retail exposure as well as other business areas in the DJIA,” the index provider said in the press release. 

The e-commerce giant’s inclusion in the index is another milestone in the retailer’s rapid expansion in the last decade. The company, founded in 1994 as an online bookseller, sells goods of all stripes and runs the world’s largest cloud-computing business. The Seattle-based company is the second-largest private sector employer in the US behind Walmart.

More than a century after its founding, the Dow has ceded its preeminence as an investor benchmark, though it remains the most exclusive register of American corporate elites. As such, its additions and deletions are a litmus for industry trends.

Meanwhile, the absence of Amazon and a slew of big tech firms from the Dow spurred the the blue-chip index to underperform peers last year. The benchmark S&P 500 gained 24% in 2023, with the tech-heavy Nasdaq 100 climbing more than double. The Dow, for its part, notched 13%.

“If any company represents the US economy better than Amazon, I don’t think we found it yet,” said Art Hogan, chief market strategist at B. Riley Wealth. “It replaces another consumer facing company, so the balance of the index remains the same.”

As the gap between the highest price stock, UnitedHealth Group Inc., and the lowest price stock, Walgreens, widened over the last several years, participants may have been anticipating constituent changes, said Kaasha Saini, head of index strategy at Jefferies. “The WMT stock split provided an opportunity for the Committee to review composition.”

That Walgreens is being replaced after its inclusion in June 2018 — a brief tenure — may not be that surprising. The company’s stock fell 30% last year as Amazon’s climbed around 80%. The troubled drugstore chain cut its dividend almost in half last month, amid a weakening retail and prescription environment. 

Meanwhile, Uber Technologies Inc. will replace JetBlue Airways Corp. in the Dow Jones Transportation Average, according to the release.

The 20-stock, price-weighted Dow Transportation index includes the largest US companies within the industry group, according to the index provider. The move — prompted by JetBlue’s low weighting — will help the gauge gain exposure to the ride-sharing industry, it said. 

Shares of Amazon rose 1.5% in extended trading after the news, while Walgreens fell over 3%. Uber gained 1%, while JetBlue was down 0.4%.

(Updates with additional context throughout)

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