Amgen Joins Dow Jones Industrial Average as the Benchmark Index Revamps to ‘Better Reflect’ the U.S. Economy
As of today’s opening bell, biotech pioneer Amgen (AMGN) joined the Dow Jones Industrial Average, making it the sixth Nasdaq-listed company to join the 30-stock benchmark. The addition of Amgen, along with Salesforce (CRM) and Honeywell (HON), revamps the Dow, reflecting the shift in the U.S. economy toward innovative technologies that power the markets.
The changes to the price-weighted index were prompted by Apple’s decision to do a four-to-one stock split, which would reduce the Dow’s weight in the Information Technology sector. With Apple trading on a split-adjusted basis starting Monday, the new additions help offset that reduction, according to S&P Dow Jones Indices.
“They also help diversify the index by removing overlap between companies of similar scope and adding new types of businesses that better reflect the American economy,” S&P Dow Jones Indices said in a statement.
CNBC’s Jim Cramer, host of “Mad Money,” agreed with that notion, saying that “these moves make a lot of sense. They bring the Dow closer to the reality of the new economy, not the memory of the old economy.”
The addition of Amgen, which is the first biotech stock to join the index, highlights the industry’s growing significance in the market. Biotech stocks have performed exceptionally well during the coronavirus pandemic, leading to a surge in biotech companies going public as they compete to develop effective Covid-19 treatments and vaccines at an accelerated pace. Nasdaq’s head of healthcare IPO listings Jordan Saxe said that he expects Nasdaq to hit a target of 45+ biotech listings, raising upwards of $9 billion by the end of 2020.
Amgen, which is celebrating its 40th anniversary this year, is the latest Nasdaq-listed company to receive a coveted spot on the Dow, joining technology giants Apple (AAPL) and Microsoft (MSFT), as well as Cisco (CSCO), Intel (INTC) and Walgreens Boots Alliance (WBA).
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