The Dow Jones Industrial Average, the iconic 30-stock benchmark that has tracked American industrial might for over a century, is undergoing a historic transformation. In a move that underscores the seismic shifts in the global economy, S&P Dow Jones Indices announced on November 1, 2024, that artificial intelligence powerhouse Nvidia and paint-and-coatings giant Sherwin-Williams will join the venerable index, replacing longtime components Intel and Dow Inc. The changes, effective before trading opens on November 8, mark not just a roster update but a symbolic passing of the torch from the PC era to the age of AI, and from traditional chemicals to a modern materials leader.
The announcement triggered immediate market reactions, with Nvidia shares climbing 3% and Sherwin-Williams jumping 5% in extended trading, while Intel and Dow Inc. edged lower. This reshuffle comes at a time when Nvidia’s market capitalization has ballooned to $3.3 trillion—second only to Apple—after its stock price surged more than 170% year-to-date, while Intel has watched its value decline by more than half amid manufacturing struggles and AI irrelevance.
How the Dow Jones Shakeup Unfolded: Inside the Index Reshuffle
According to the official announcement from S&P Dow Jones Indices, the index committee made the changes “to ensure a more representative exposure to the semiconductors industry and the materials sector respectively.” The Dow Jones Industrial Average is a price-weighted index, meaning stocks with higher share prices have greater influence on its movements. This characteristic played a crucial role in the decision-making process.
Intel’s declining stock price—which has fallen significantly over recent years—meant it was having “minimal impact on the index,” according to Howard Silverblatt of S&P Dow Jones Indices. Similarly, Dow Inc. had become the smallest company in the DJIA by market capitalization. The committee determined that Nvidia, with its high-flying stock price even after a 10-for-1 split in May 2024, would better represent the semiconductor industry’s current dynamics, while Sherwin-Williams would more accurately reflect the materials sector’s performance.
“These are name-brand companies, everything from Walmart to Goldman Sachs to United Healthcare,” said James Angel, a finance professor at Georgetown University, in an interview with Marketplace. “The composition of the Dow is meant to reflect the U.S. stock market and reveal how it’s doing at a glance.”
Timeline: How Nvidia’s Meteoric Rise Led to This Historic Moment
The road to Nvidia’s Dow inclusion reads like a case study in technological disruption and market timing. Just five years ago, Nvidia was primarily known as a maker of graphics chips for gaming. Today, it stands as the central engine of the artificial intelligence revolution, with its graphics processing units (GPUs) powering data centers for tech giants including Microsoft, Meta, Google, and Amazon.
Nvidia’s financial performance has been nothing short of spectacular. The company’s revenue has more than doubled in each of the past five quarters, tripling in three of them, as demand for its AI chips reached what CEO Jensen Huang called “insane” levels. This torrid growth propelled Nvidia past Microsoft earlier in 2024 to become the world’s second-most valuable company, and it has been closing in on Apple for the top spot.
Meanwhile, Intel’s decline has been equally dramatic. Once the undisputed king of semiconductors, Intel has lost significant market share to Advanced Micro Devices in the CPU space and has made little progress in AI accelerators. The company announced plans in August 2024 to cut 16,500 jobs as part of a massive restructuring effort, despite reporting better-than-expected sales for the third quarter.
For Sherwin-Williams, the path to Dow inclusion has been one of steady, remarkable growth. The company’s stock has increased approximately 25-fold over the past 20 years, according to Mike Harrison, an analyst at Seaport Research Partners. “We’re looking at a company that’s basically grown about 25 times in the last 20 years, which is a really, really impressive track record,” Harrison told Marketplace.
Why This Dow Jones Reshuffle Matters: Expert Analysis and Market Impact
The addition of Nvidia and Sherwin-Williams to the Dow Jones Industrial Average represents more than just a routine index rebalancing—it signals how the committee that oversees the benchmark views the evolving U.S. economy. With Nvidia’s inclusion, four of the six trillion-dollar technology companies are now represented in the index (Apple, Microsoft, Amazon, and Nvidia), leaving only Alphabet and Meta outside the Dow’s select group of 30 companies.
“It’s been said that being in the Dow is a sign you’ve made it, and being out is a sign you’re no longer one of the cool kids,” observed Marketplace in its coverage of the changes. This sentiment echoes through Wall Street, where inclusion in the Dow brings not just prestige but also increased visibility and potentially greater stability from index fund investments.
The timing of these changes is particularly noteworthy. They come just nine months after the last Dow reshuffle in February 2024, when Amazon replaced Walgreens Boots Alliance. This relatively rapid turnover contrasts with the index’s historical tendency toward stability—General Electric, for instance, has been in and out of the Dow three times over its long history.
From an investment perspective, the changes highlight the importance of sector representation in major indices. As Silverblatt explained, the committee wanted “the semiconductor industry to have a stronger presence” in the Dow, and Nvidia’s AI dominance made it the obvious choice. Similarly, Sherwin-Williams’ consistent growth and strong position in the professional paint market made it a better representative of the materials sector than Dow Inc., which has no relation to the Dow Jones index despite its similar name.
Where Things Stand Now: Latest on the Dow Jones Transformation
As of early November 2024, the stage is set for the formal transition. The divisors used to calculate the Dow Jones Industrial Average from its components’ prices will be adjusted prior to the market open on November 8, 2024, ensuring no distortion in the index’s reflection of the U.S. stock market. The new divisors will be available in the end-of-day index level files via the S&P Dow Jones Indices FTP site beginning November 7.
Market reaction to the announcement has been largely positive for the incoming companies. Nvidia shares climbed 3% in extended trading following the news, while Sherwin-Williams jumped 5%. Intel and Dow Inc. saw their stock prices edge lower, though the declines were modest given that index fund rebalancing won’t occur until the effective date.
For retail investors, the changes serve as a powerful reminder of how quickly market leadership can change. A company that didn’t exist 30 years ago (Nvidia was founded in 1993) is now replacing a semiconductor pioneer that dominated the industry for decades. Meanwhile, a 158-year-old paint company (Sherwin-Williams was founded in 1866) is displacing a materials science giant that traces its roots back to the 19th century.
What Happens Next: The Road Ahead for the Dow Jones Industrial Average
The November 2024 reshuffle raises important questions about the future composition of the Dow Jones Industrial Average. With technology companies now representing a significant portion of the index’s weighting, and with AI continuing to reshape the economic landscape, further changes may be necessary to maintain the Dow’s relevance as a barometer of the U.S. economy.
Some analysts speculate that Alphabet and Meta may eventually find their way into the Dow, particularly if their stock prices become more amenable to the index’s price-weighted structure. Both companies have previously executed stock splits—Alphabet in 2022 and Meta in 2024—that reduced their share prices, potentially making them more suitable for Dow inclusion.
Another area to watch is the financial sector, which currently has strong representation through companies like JPMorgan Chase and Goldman Sachs. However, as fintech continues to disrupt traditional banking, pressure may grow to include a digital payments or financial technology company in the index.
For now, investors should prepare for increased volatility in Nvidia and Sherwin-Williams shares around the November 8 effective date as index funds rebalance their holdings to reflect the new Dow composition. Historically, being added to a major index provides a short-term boost from forced buying by index-tracking funds, though the long-term impact depends on the company’s fundamental performance.
The Bottom Line: Key Points to Remember
The Dow Jones Industrial Average is getting a major update that reflects profound changes in the American economy. Nvidia’s replacement of Intel symbolizes the shift from personal computing to artificial intelligence as the driving force of technological progress. Sherwin-Williams’ displacement of Dow Inc. represents the ongoing evolution of the materials sector toward companies with consistent growth and strong market positions.
For investors, these changes highlight the importance of staying attuned to sector rotations and economic transformations. The companies that lead today may not lead tomorrow, and even iconic indices like the Dow must adapt to remain relevant. As the November 8 effective date approaches, market participants will be watching closely to see how this historic reshuffle influences not just the index itself, but broader perceptions of what constitutes industrial leadership in 21st-century America.
