In more proof that it’s an ill wind that blows no one some good, bad news for General Electric is good news for Walgreens Boots Alliance. The Dow Jones Industrial Average (aka the Dow) is replacing General Electric with Walgreens Boots Alliance. GE had been one of the thirty companies originally included in the stock market index since it was started in 1896. The switch takes place on June 26.
Walgreens will be added to the Dow’s fourth company in the consumer-staples category, according to Marketwatch. The move helps reflect the U.S. economy because it will reflect the roles of consumers and healthcare, according to Reuters. The other companies in this category are Walmart, Proctor & Gamble, and Coca-Cola. Four healthcare or pharmaceutical companies are in the Dow—Johnson & Johnson, Merck, Pfizer, and UnitedHealth Group.
The Dow measures the price movement of 30 large publicly traded U.S. companies, using a price-weighted system. For more than 120 years, it has served as a benchmark for tracking the activity of the stock market. At one time, only industrial companies were included in the Dow, but it has kept “industrial” as part of its title.
The news buoyed the stock price for Walgreens, pushing it up more than 3%, whereas GE suffered a small loss of 1.5%. Walgreens Boots Alliance owns the Walgreens and Duane Reade pharmacy chains in the United States, and the Boots and Benavides chains internationally.
GE, a historic firm cofounded by Thomas Edison, was the world’s most valuable public company as recently as 2005, says Marketwatch. But being dropped from the Dow is not always a sign of impending doom. Other companies that have been dropped include Bank of America, which is still going strong.