Dow welcomes three new components: Honey (SHE),, Salesforce (CRM) and Amgen (AMGN). And say goodbye to ExxonMobil (XOM),, Pfizer (PFE) and Rayton (RTN). Don’t worry, the Dow won’t jump or fall suddenly (well … not because of the new stocks anyway). The S&P Dow Index, which controls the Dow, changed the divisor used to generate the overall index.
Still change to Dow (UNDUE)
are remarkable because the index lags wider than the stock market ̵
1; bad. Many investors consider the Dow synonymous with the market, but these are just 30 hand-picked stocks that don’t always do a great job of portraying stock performance.
The much broader S&P 500 is up 8.6% this year. The Dow has risen only 0.4% and still does not reach its record level since February (S&P 500 and Nasdaq are at record highs at the moment).
Continuing the trend, the Dow fell 200 points, or 0.7%, on Monday. The S&P 500 fell just 0.1 percent and the Nasdaq rose 0.4 percent.
One of the leading factors in Dow’s hurdles in 2020 is the lack of technology stocks. The largest – and therefore heaviest-weighted – shares of the S&P 500 are Apple, Microsoft (MSFT),, Amazon (AMZN),, Alphabet (GOOGL) and Facebook (FB). Of these, Dow includes only Apple and Microsoft. This means that the profits from these companies have been missed to be electrified – especially Amazon, which jumped over 80% this year.
By adding Salesforce, Dow is leading another technology company. But Salesforce is weak compared to leading technology companies. Recently, Salesforce was torn apart and introduced specifically to help Dow overcome the effects of Apple’s share split on Monday (more on that in a second).
But that’s not enough to make up for it: Apple’s huge profits this year have helped add more than 1,400 points to the Dow, analysts at Bespoke Investment Group said in a recent study. The spin-off means the company’s weight will fall from 12.1% to just under 3%, which means the Dow is ready to reap less benefits from Apple’s move forward.
The shares are divided
Two of the most famous stocks also have a new look.
Apple (AAPL) the stock is now about $ 400 cheaper after splitting it 4-1, which went into effect on Monday. At Tesla (TSLA) the shares are $ 1,800 cheaper after splitting it 5-1.
The division will not change the value of the total participation of any investor of any of the companies. This will simply increase the number of shares that make up this pot. So investors holding Apple will receive three more shares for each share they held last week – but the value of each share will be far less. Tesla shareholders receive four shares for each share they hold.
The division of shares makes the shares more accessible to everyday investors. Apple shares are now trading at about $ 128 a share after gaining 2.6% on Monday. That’s compared to about $ 500 last week.
Tesla shares began trading at $ 468 a share on Monday, up 5.6 percent. Last week it was about $ 2,200.
Both stocks jumped in anticipation of their split, suggesting that the lower price could help attract buyers in the near future.
– Julia Horowitz of CNN Business contributed to this report.