Will a more volatile Dow Jones Industrial average follow suit after Amazon’s addition? Amazon joins the Dow Monday, as the 127-year old index adds a much higher-beta stock that could bring some bigger moves with more frequency going forward. While it’s not unusual for an incoming Dow stock to be more influential than the one it is replacing – since often times the stock being booted is a lower-priced stock, Amazon’s stock price does see far more dollar price volatility than Walgreens or even Walmart (pre-split). Remember, that for every $1 any Dow stock moves, the index moves roughly 6.5 points. Look at the magnitude of Amazon’s daily stock moves (in either direction) during the past year (number of occurrences is in the right column): Almost 40% of the sessions saw a move of $2 or more Contrast that to Walgreens’ moves in the past year (not surprising of course, given its low stock price). Only 1 session saw a move of $2 or more. But contrast Amazon’s moves to even Walmart, which had essentially the same share price pre-split as Amazon (WMT $175.56, AMZN $174.99). Walmart is of course a far lower-beta stock – and has moved the Dow pre-split far less than what Amazon can potentially do going forward. Just 12% of the sessions saw a move of $2 or more Even Apple wasn’t quite as impactful as Amazon is today when it was added to the Dow a few years ago. Apple had a share price of about $127 when it was added in March 2015 (price based on pre-2020 4-for-1 split levels). Here’s what Apple’s share price movement looked like in the first year as a Dow component: About a quarter of the sessions saw a move of $2 or more in the first year as a Dow component.
