Verizon is booted out of Wall Street's most famous index, replaced by Google's parent firm
On June 29, when the market opens, Verizon will no longer be a member of the Dow 30.
Verizon out, Google parent Alphabet in as the Dow 30 is adjusted | Image by PhoneArena
The Dow Industrial Average represents the price-weighted average of 30 stocks, and over the years it has become the indicator people refer to when they want to know how the "market" is doing. As time goes by, changes are made to the Dow to have it include companies that are part of today's modern world.
Back in 1976, AT&T and Kodak were the closest stocks resembling tech plays in the Dow 30
50 years ago, back in 1976, companies that comprised the Dow Jones Industrial Average included firms that built machines and cars, and produced oil and gas (International Harvester, Chrysler, General Motors, Exxon, and Texaco). Eastman Kodak might have been the only company you could consider to be a technology play, and American Telephone & Telegraph was the only pure telecommunications play in the Dow 30.
By 2016, 10 years ago, the mobile age had already taken over, and this could be seen with some of the changes made to the 30-stock Dow Industrials. Instead of old-line manufacturing companies, you now had Apple and the device that changed the world, the iPhone, on board.
Apple first joined the Dow Industrial index in 2015, replacing AT&T
While AT&T had been removed from the Dow 30 in 2015 (replaced with Apple), Verizon's inclusion was a strong indication of how powerful mobile telecommunications had become. After all, by 2016 Verizon had become the largest wireless carrier in the US; meanwhile, the largest overall carrier, AT&T, was not a member of the index that the public used as an indicator for the entire stock market.
Other big wireless-related firms that were members of the 30-stock Dow Industrials in 2016 were:
- Cisco-a provider of hardware, software, and services for wireless telecom companies.
- Intel-supplied Apple with LTE modem chips for the iPhone in 2016.
- Microsoft-drew between $1 billion and $2 billion annually from royalties on patents used by Android phone manufacturers like HTC and Samsung.
Next Monday Verizon will be replaced by Google parent Alphabet in the Dow 30
Starting with the opening bell on Monday, June 29, Verizon will be removed from the 30-stock Dow Industrials list and will be replaced by Google parent Alphabet. This is significant because funds created to copy the performance of the Dow 30 will start selling Verizon and buying Alphabet. Adding Google to the 30-stock Dow Industrials via Alphabet reflects the increasing importance of AI, cloud computing, and mobile advertising in the world.
The all-time stock history for Google and Alphabet. | Image by Yahoo
Verizon was also removed from the index because a lower-priced stock in a price-weighted index like the Dow 30 has less influence than a higher-priced stock like Alphabet. On Tuesday, Verizon and Alphabet shares closed at $46.73 and $346.08, respectively.
Before next Monday's change, the current makeup of the Dow Industrials is as follows:
- 3M
- Amazon
- American Express
- Amgen
- Apple
- Boeing
- Caterpillar
- Chevron
- Cisco Systems
- Coca-Cola
- Goldman Sachs
- Home Depot
- Honeywell
- IBM
- Johnson & Johnson
- JPMorgan Chase
- McDonald's
- Merck
- Microsoft
- Nike
- Nvidia
- Procter & Gamble
- Salesforce
- Sherwin-Williams
- Travelers
- UnitedHealth Group
- Verizon
- Visa
- Walmart
- Walt Disney
You can see that the Dow 30 includes the most valuable publicly traded U.S. company, which is AI chipmaker Nvidia. The company is valued at over $5 trillion.
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