Post by account_disabled on Feb 22, 2024 0:49:05 GMT -5
The elimination of Exxon is a “sign of the times,” said Raymond James, a multinational investment bank, as the company and the energy sector in general are reeling, not only from the global transition to clean energy, but also from the force of the names of technology. Pippa Stevens commented on CNBC that the energy sector now represents only 2.5% of the S&P 500, compared to 6.84% five years ago, and 10.89% ten years ago. Technology has jumped from 18.48% of the index in 2010 to 28.17% today. Edward Jones' Jennifer Rowland noted: Apple. Microsoft. Amazon. Alphabet. Facebook ...like five tech stocks that are individually larger than the entire US energy sector, which he called "pretty sobering" and "symbolic of how much the energy sector has fallen in recent years." Without a doubt, fossil fuels' days are numbered. Chevron is also in the Dow, meaning the energy sector was overrepresented. By removing Exxon from the DJIA, the index provider is clearly reacting, accentuating the extremely negative investor sentiment on almost everything related to oil and gas. Pavel Molchanov, collaborator of Raymond James.
Exxon shares fell 3% on Tuesday after news of the recall. This represents a combination of the harsh oil price backdrop impacted by COVID-19, but also concerns about the eventual peak in oil Bulgaria Mobile Number List demand (which had emerged long before COVID-19) and ESG-related objections. to fossil fuels in general. Over time, the S&P 500 has surpassed the Dow in importance as it better reflects the market and the economy. Not only does it contain hundreds of additional stocks, but it is also weighted by market capitalization, meaning larger companies have greater influence. The Dow, on the other hand, is price-weighted. About $24 billion in actively managed funds track the Dow, dwarfed by the more than $300 billion that track the S&P 500, according to Goldman Sachs data. The chasm in the passively managed funds that follow each is even deeper. Still, the removal of Exxon is significant. As recently as 2013, Exxon ruled the S&P 500 and the broader market as the largest publicly traded U.S. company. In 2007 its market capitalization peaked at $500 billion, but has been slowly declining since then.
Over the past five years the stock has dropped nearly 40%, and the company is now valued at $178.5 billion, according to FactSet data. Salesforce, on the other hand, has seen its shares jump almost 220% in the last five years, and currently has a market capitalization of around $187.5 billion. This action does not affect our business or the long-term fundamentals underpinning our strategy. Our portfolio is the strongest it has been in more than two decades, and our focus remains on creating shareholder value by responsibly meeting the world's energy needs. Exxon Why Exxon and not Chevron? Chevron stock, while also struggling this year, has returned about 25% over the past five years. Its stock price is currently a little more than double that of Exxon. While this is not relevant to investing in general, it is relevant to the price-weighted Dow. But it's probably not the only reason Exxon took the hit instead of Chevron. Molchanov noted that Chevron is " positioned much more directly as an oil producer " with a " high degree of operational influence on commodity prices ." Exxon's vertical integration, on the other hand, means heavy exposure to refining and chemicals. The index committee likely wanted to maintain some exposure to oil, making Chevron the best choice to do so, especially given that chemical giant Dow.