ExxonMobil, together with Pfizer and Raytheon, will be out of the Dow Jones industrial average, announced on Monday. Exxon Mobil is known to be the index’s longest-serving company. The energy giant even became the largest American business in terms of market cap in 2011. However, stocks from tech companies sparked more interest in the previous years, per the Markets Insider.
Oil Sector Unwell
Exxon Mobil has been in the Dow’s stock index for a little over nine decades now. But with the pandemic continuing to cause cash burn to more and more businesses, even the more prominent brands, the large oil company will be kicked out of the Dow Jones. This new index will take effect on the opening of the market on August 31.
The oil industry suffered big time with the outbreak of COVID-19 dragging down demand for travel, and in turn, lowering demand for fuel. Last month, both Exxon and Chevron reported epic losses for the past quarter. Of course, the pandemic is to blame for bleeding billions of dollars. Exxon Mobil even contemplated lowering down costs, which could translate to many layoffs.
Software firm Salesforce will take the place of the oil company Exxon Mobil.
Exxon, Pfizer and Raytheon were removed from the Dow Jones Industrial Average ahead of Apple’s stock split, replaced by Amgen, Salesforce and Honeywell https://t.co/bwM4bBOktp
— The Wall Street Journal (@WSJ) August 24, 2020
Giant pharma firm Pfizer will be superseded by Thousands Oaks-based biopharma company Amgen. Meanwhile, multinational conglomerate Honeywell will replace aerospace and defense company Raytheon Technologies.
‘Diversifying The Index’
According to Dow, this decision came from Apple’s move of a 4-for-1 stock split. This will affect the price-weighted index of tech stocks in Dow, per the Markets Insider. The added tech companies are expected by the Dow Jones to help “offset” the effects of Apple’s split since the tech titan’s surpassing of the $2 trillion mark.
Dow stated that the reshuffle would “help diversify the index by removing overlap between companies of similar scope and adding new types of businesses that better reflect the American economy.”