Key insights
- S&P Dow Jones Indices announced significant changes to major indexes, including Alphabet replacing Verizon in the Dow Jones Industrial Average and Honeywell Aerospace joining the S&P 500. These inclusions can drive fund flows and provide a modest bullish signal for the affected stocks and potentially broader market sentiment due to increased exposure to growth sectors like AI.
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While investors watch to see if and when SpaceX will be added to major stock indexes, other changes to some key market benchmarks are already on the way.
S&P Global said after Tuesday's closing bell that Google parent Alphabet (GOOGL) will be added to the blue-chip Dow Jones Industrial Average ahead of Monday's open, taking the place of Verizon Communications (VZ). The index provider said that adding Alphabet will "broaden and strengthen" the measure's exposure to industries including AI, autonomous vehicles, and media.1
Inclusion in a major index can benefit stocks in a number of ways, introducing them to new investors and spurring buying by funds that track a particular index.
S&P Global also said Honeywell (HON) will remain a Dow component following the spin-off of one of its divisions, also expected to take place by next week, and will be called Honeywell Technologies. The spin-off, Honeywell Aerospace, will trade under the "HONA" ticker and be added to the S&P 500 on Monday.
Honeywell Technologies will retain its place in the S&P 500, but will be replaced in the S&P 100 by Honeywell Aerospace.2 Honeywell Aerospace will take the S&P 500 spot held by Conagra Brands (CAG), which will move to the S&P SmallCap 600.
Toast (TOST) and IES Holdings (IESC) will join the S&P MidCap 400, replacing TopBuild (BLD) and Janus Henderson Group (JHG).
Alphabet shares were up 1% in recent trading, while Verizon shares fell 2%. Honeywell shares gained 1%, while Toast and IES rallied 4% and 7%, respectively.