Amazon And Alphabet Could Give The Dow A 21st Century Facelift | CNN Business

Markets and Investing

The Dow Jones Industrial Average is getting a massive shakeup to balance out the disruption from Apple’s stock split. CNN’s Matt Egan explains why Exxon is out and Salesforce is in.

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Exxon gas station at night in Dallas, Texas, United States, April 27, 2016.

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Dow 30 shuffle brings in three new stocks

A war in Ukraine, record-breaking inflation and soaring gas prices are troubling consumers and investors. Dana Peterson, Chief Economist at The Conference Board, explains to CNN Business’s Alison Kosik the risk the US economy faces with recession and stagflation.

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Economist explains the risks of recession and stagflation

The US stock market tumbles as the military conflict between Russia and Ukraine persists. CNN’s Richard Quest points to uncertainty caused by the exodus of companies from Russia and Ukraine as a reason for the dip. When companies don’t know the next step, the “investment landscape is very dangerous,” Quest says.

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In this photo provided by the New York Stock Exchange, trader Colby Nelson works on the floor, Monday, Feb 28, 2022. Markets quivered Monday amid worries about how high oil prices will go and how badly the global economy will get hit after the U.S. and allies upped the financial pressure on Russia for its invasion of Ukraine.

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Corporate exodus from Russia continues and US stocks feel the impact

JP Morgan Head of Global Commodities Natasha Kaneva explains the current imbalance in the oil market and where prices are headed.

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Commodities expert: Panic dominates oil market as Russian oil is shunned

CNN’s Anna Stewart reports that everyday life of everyday people has become “significantly worse” due to sanctions imposed on Russia. Even Russian oligarchs weighed in on the harm brought on by the war in Ukraine.

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People queue outside a branch of Russian state-owned bank Sberbank to withdraw their savings and close their accounts in Prague on February 25, 2022, before Sberbank will close all its branches in the Czech Republic later in the day. - US President Biden was the first to announce sanctions, hours after Russian President Putin declared a

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Russian oligarchs call for end to Putin’s war

Western countries announced fresh sanctions against Russia in response to the invasion of Ukraine. The Moscow stock exchange closed after the ruble crashed to a record low against the US dollar. CNN’s Christine Romans reports.

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People stand in line to use an ATM money machine in Saint Petersburg, Russia February 27, 2022. REUTERS/Anton Vaganov

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Russia’s ruble crashes as its banking system reels

American families are going to feel the impact of Russia’s attack on Ukraine at the grocery store, gas station and retirement accounts. CNN’s Matt Egan reports.

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A gas pump at a Shell station on November 22, 2021 in Miami, Florida.

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How the Russian invasion will impact the US economy

All eyes will be on the Federal Reserve in March when it’s expected to raise interest rates amid rising inflation. But just how aggressive will they be? Lindsey Piegza, Chief Economist at Stifel, explains.

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Economist: Market is overestimating Fed’s rate hike plans

Ryan Detrick, Chief Market Strategist at LPL Financial, puts the Ukrainian border situation in historical context and explains why this could actually be an opportunity for investors down the line.

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NEW YORK, NEW YORK - JANUARY 24: Traders work on the floor of the New York Stock Exchange (NYSE) on January 24, 2022 in New York City. Stocks fell again on Monday as inflation fears, rising oil prices and continued tensions with Russia added to economic worries for global markets. (Photo by Spencer Platt/Getty Images)

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Market strategist: Geopolitical volatility could be a future buying opportunity

Standard Cognition CEO & co-founder Jordan Fisher explains how his company’s technology, which allows consumers to pick up products and pay for them without visiting the checkout line, could be a boon for consumers and retailers.

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Standard Cognition

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Amazon had its biggest one day gain ever just one day after Facebook’s parent company, Meta, had its biggest one day loss. Lo Toney, founding managing partner at Plexo Capital, explains why and how big cap tech stocks are diverging in market value.

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Barry McCarthy will become Peloton’s CEO, replacing John Foley who will become the company’s executive chair. The fitness company also plans to lay off about 2,800 employees. CNN’s Christine Romans reports.

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John Foley, cofounder and CEO of Peloton, and Vanity Fair correspondent Jane Fox speak onstage during 'Peloton Gears Up' at Vanity Fair's 6th Annual New Establishment Summit at Wallis Annenberg Center for the Performing Arts on October 23, 2019 in Beverly Hills.

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Valentine’s Day will be on a Monday this year. That’s not good news for business. Farmgirl Flowers Founder & CEO Christina Stembel explains why romantics this year will see higher flower prices and shipping delays.

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Best friends AJ Vanover and George “Rash” Adams were once making $35,000 a year working together at a battery store in rural Missouri. But a bet on GameStop last year changed their lives. So what happens after you strike market gold? CNN’s Jon Sarlin reports.

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JP Morgan Chief Global Strategist David Kelly explains what the Fed needs to focus on to avoid a “boom-bust” cycle and where investors should be looking.

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The Federal Reserve building is seen in Washington, DC, in October.

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Kenny Polcari, Managing Partner of Kace Capital Advisors, thinks that the market will still fluctuate before finding stability and advises putting money into “quality” stocks.

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Traders work on the floor of the New York Stock Exchange (NYSE) on January 07, 2022 in New York City. Markets fell slightly in morning trading as investors reacted to a government jobs report showing that the U.S. economy added far fewer jobs than expected in December.

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New York CNN Business —  

Amazon and Google owner Alphabet are two of the most dominant companies on Earth. Each is worth more than $1 trillion and is a leader in multiple industries. But neither stock is a member of Wall Street’s most exclusive club: the Dow Jones Industrial Average. That may soon change.

Amazon (AMZN) announced late Wednesday that it plans to do a 20-for-1 stock split at the end of May. While that won’t change the value of the company, it means that one share, which now costs around $2,925, would trade for a little less than $150 based on current prices.

Alphabet announced its own 20-for-1 stock split last month. The split takes effect in July. The price of Alphabet’s most widely available class A shares, trading under the ticker symbol of GOOGL (GOOGL), currently cost about $2,600. So if the split happened today, the price would drop to around $130.

Why does this matter for the Dow? The group of 30 venerable blue chip stocks is a price-weighted average and not a market cap weighted index like the S&P 500.

That means that if companies with quadruple digit stock prices were in the Dow, their moves would drastically skew the point value of the index every day. The company that currently has the biggest weighting in the Dow is UnitedHealth (UNH), by virtue of its $480 a share stock price.

One could argue that the only reason Alphabet and Amazon aren’t already in the Dow is because of their prohibitively high stock prices. After all, they are the third and fourth most valuable companies in the S&P 500, trailing only Apple and Microsoft.

Microsoft (MSFT) has been in the Dow since 1999. Apple (AAPL) was added to the index in 2015 after its own big stock split.

Of course, adding Alphabet and Amazon would mean that two current Dow listed companies would have to be removed. There are several logical candidates. Older tech firms Intel (INTC) and IBM (IBM) could be kicked out to make room for Amazon and Alphabet.

Insurance company Travelers (TRV) and drug store chain Walgreens (WBA) are the two smallest Dow components as measured by market valuation. So kicking them out could also make sense.

Walgreens, however, was just added to the Dow in 2018. It replaced long-time Dow member General Electric. (GE)

The last major shakeup of the Dow took place in the summer of 2020. Salesforce (CRM), Amgen (AMGN) and Honeywell (HON) were added, replacing Exxon Mobil (XOM), Pfizer (PFE) and Raytheon.

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