Amazon.com Inc. is set to join the prestigious Dow Jones Industrial Average, replacing Walgreens Boots Alliance in the 30-company index. This move comes as a result of a 3-for-1 stock split by another Dow company, Walmart, which will reduce Walmart's stock price and weighting in the index. S&P Dow Jones Indices made the decision to include Amazon in the Dow to increase the index's consumer retail exposure and reflect the evolving nature of the American economy.

The Dow Jones Industrial Average, established in 1896, is a measure of 30 stocks of well-known companies, often referred to as "blue chips." The index has gone through many changes over the years, with newer-economy companies like Apple, Intel, and Microsoft being added in recent years. Amazon's inclusion in the Dow will make it the 17th most heavily weighted stock in the index, while Walmart's weighting will drop to 26.

While the Dow is a widely recognized index, professional investors tend to look at broader measures of the market, such as the S&P 500, which has nearly 17 times the number of companies. The performances of the Dow and S&P 500 have historically tracked closely, but have diverged significantly in recent years due to the S&P 500's emphasis on Big Tech stocks.

The Dow and S&P 500 also differ in how they measure index movements, with the Dow giving more weight to stocks that add or subtract more dollars to their stock price, while the S&P 500 gives more weight to stocks based on their overall size. Despite its age and historical significance, a triple-digit move for the Dow now represents a much smaller percentage change in the market.

Overall, Amazon's inclusion in the Dow marks a significant shift in the composition of the index and reflects the changing landscape of the American economy. This move will have ripple effects on the weighting of Dow stocks and further differentiate the performance of the Dow from the S&P 500.