Nvidia (NVDA) will replace Intel (INTC) in the Dow Jones Industrial Average index (^DJI). S&P Dow Jones Indices senior index analyst Howard Silverblatt joins Seana Smith and Brad Smith to break down what investors need to know and how it will affect the chipmaker’s stock and the index itself. “In order to add Nvidia, obviously, you had to take something out, and Intel was a difficulty,” Silverblatt tells Yahoo Finance, explaining that because the index is price-weighted, Intel’s low price, relative to others in the index, “did not have a material impact on the index when it was moving, [and] didn’t represent the weighting within the index where we wanted to.” “Nvidia, on the other hand, even though it is less than the average stock … does better represent the field and has more of an impact on the index,” he adds. Silverblatt notes that Sherwin Williams (SHW), which was added to the Dow along with Nvidia, “has a lot more weight than Nvidia” because the index is price-weighted. Watch the video above for more of Silverblatt’s perspective on Nvidia’s inclusion in the index and the market’s role in deciding index components.
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