On Monday, S&P Dow Jones Indices announced the largest changes to the 30-stock benchmark in seven years. Exxon’s removal is a “sign of the times,” Raymond James said, as the company — and energy sector broadly — falters, a weakness made all the more apparent by strength in technology names. Energy now makes up just 2.5 percent of the S&P 500, compared with 6.84 percent five years ago, and 10.89 percent 10 years ago. Edward Jones’ Jennifer Rowland noted that five tech stocks — Apple, Microsoft, Amazon, Alphabet and Facebook — are individually larger than the entire U.S. energy sector, which she called “pretty sobering” and “symbolic of just how far the energy sector has fallen over the past few years.”Chevron is also in the Dow, meaning the energy sector was overrepresented in the benchmark to begin with. Over time the S&P 500 has surpassed the Dow in importance given that it better reflects the market and economy.

Source: The Standard August 26, 2020 07:25 UTC