Author: Reuters

By Shariq Khan

NEW YORK (Reuters) -Oil prices rose about 1% on Wednesday as geopolitical tensions raged on in the Middle East and traders assessed signs of near-term supply tightness.

U.S. West Texas Intermediate crude futures (WTI) rose by 73 cents, or 1%, to $77.77 a barrel by 2:02 p.m. ET (1902 GMT), while Brent crude rose 56 cents, or 0.7%, to $82.90 a barrel.

Oil contracts tied to near-term deliveries have been trading at their steepest premium to later-dated contracts in multiple months, a market structure known as backwardation and considered a sign of a tightly supplied market.

Timespreads are showing markets tightening, UBS analyst Giovanni Staunovo said, adding that crude stocks declined in the Amsterdam-Rotterdam-Antwerp trading hub while product stocks slid in Fujairah last week.

Also supporting the market, U.S. refineries are showing signs of returning from maintenance after slumping to their lowest operating rates since December 2022, spurring builds in crude stockpiles.

“Recent refinery outages led to some crude oil builds across the globe but these could be coming back online which will put pressure on crack spreads and could support more crude usage,” said Alex Hodes, energy analyst at StoneX.

Analysts expect U.S. refinery runs to have risen by 0.9 percentage point last week from 80.6% of total capacity in the previous week, according to a Reuters poll. U.S. crude stocks likely rose last week by nearly 4 million barrels last week, the poll showed.

The American Petroleum Institute will post its weekly inventory data after 4:30 p.m. ET, followed by the Energy Information Administration’s report at 11 a.m. ET on Thursday, both delayed a day by Monday’s U.S. holiday.

Houthi attacks on commercial vessels in the Red Sea and Bab al-Mandab strait have continued to stoke concerns over freight flows through the critical waterway. Drone and missile strikes have hit at least four vessels since last Friday.

Capping oil’s gains, a sharp selloff in U.S. stock markets has dampened investors’ risk appetite, Price Futures Group analyst Phil Flynn said in a note.

The tech-heavy Nasdaq led declines on Wall Street as investors braced for Nvidia’s high-stakes earnings report that could hinder this year’s AI euphoria if results are not stellar.

The U.S. Federal Reserve is concerned about cutting rates too soon, minutes of its January policy meeting showed. Traders of U.S. short-term interest-rate futures stuck to bets the Fed will begin cutting interest rates no earlier than June.

Concerns that rate cuts by the Fed could take longer than thought have been weighing on the outlook for oil demand. U.S. inflation data last week pushed back expectations for an imminent start to the Fed’s easing cycle, with economists polled by Reuters now forecasting a cut in June.

(Reporting by Robert Harvey in London, Mohi Narayan in New Delhi, Andrew Hayley in Beijing; Editing by David Evans and Marguerita Choy)

By Stephen Nellis and Max A. Cherney

(Reuters) -Intel said on Wednesday that Microsoft plans to use its services to manufacture a custom computing chip and that the company expects to beat an internal deadline of 2025 to overtake its biggest rival, Taiwan Semiconductor Manufacturing Co, in advanced chip manufacturing.

The chipmaker also gave new details on how it plans to maintain a lead over TSMC into 2026 and beyond.

Intel made the disclosures at an event in San Jose, California, at the first technology conference for Intel Foundry, the contract manufacturing operation it established to compete with TSMC.

Intel says it plans to retake the mantle of making the world’s fastest chips from TSMC later this year with what it calls Intel 18A manufacturing technology and extend that lead into 2026 with new technology called Intel 14A.

It said Microsoft will use its 18A technology to make an undisclosed chip and that it now expects $15 billion of foundry orders, up from the $10 billion that the company had earlier told investors to expect.

The news of 14A technology is the first time that the Silicon Valley company has given details of its plans beyond the 2025. That is the deadline that Intel’s CEO, Pat Gelsinger, had set to regain the chipmaking crown when he took the reins three years ago.

For decades, Intel made chips only for itself and used its lead in manufacturing to create a cycle in which it made chips with industry-leading performance and charged a premium for them. Those margins, in turn, helped fund manufacturing advances. But when Intel lost its manufacturing lead, its chips became less competitive and margins slipped, sapping the source funding for a manufacturing rebound.

Now, Intel is counting on potentially billions of dollars in U.S. government subsidies and business from outside customers to help it get back on track.

It is hoping some customers will be enticed by its long history of operating cutting-edge factories on multiple continents, especially those with concerns about TSMC’s practice of keeping its most advanced factories clustered in Taiwan.

“It’s a sales pitch that’s resonating right now. People want that,” Stu Pann, the executive overseeing Intel Foundry, said of the company’s geographic diversity.

Intel says it has four “large” customers signed up for its 18A manufacturing technology but has yet to name them. It is unclear whether Microsoft is among those financially important customers.

Intel said on Wednesday it was partnering with Arm Holdings to make it easier to make chips with Arm technologies in its factories. Intel also said it will work with the University of California Berkeley and the University of Michigan to allow students to access its 18A manufacturing technology.

Intel also has a special technology that analysts say will be useful for speeding up power-hungry artificial intelligence chips. Nvidia, the leader in the AI chip market, has said it is evaluating Intel’s manufacturing technology, but the two companies have not announced a deal.

Intel’s effort to lure in outside customers “is the key to the turnaround story,” said Ben Bajarin, chief executive of consulting firm Creative Strategies.

“Unfortunately, it’s an unanswered question, because this is a two-to-three-year journey before we have any inkling of knowing that this is working.”

(Reporting by Stephen Nellis and Max A. Cherney in San FranciscoAdditional reporting by Arsheeya Bajwa in BengaluruEditing by Himani Sarkar and Matthew Lewis)

WASHINGTON (Reuters) – U.S. labor unions embarked on the highest number of strikes in 23 years in 2023 as they sought hefty wage increases, benefits and better working conditions for their members.

There were 33 major work stoppages last year, the most since 2000, the Labor Department’s Bureau of Labor Statistics said on Wednesday. It described a major work stoppage as involving 1,000 or more workers and lasting at least one shift during the workweek, Monday through Friday, excluding federal holidays.

The number of strikes averaged 16.7 over the past 20 years.

Organized labor scored some major victories last year, with the United Auto Workers union, among others, securing record contracts after a six-week targeted strike.

A total 458,900 workers participated in a strike last year, with the services sector accounting for 397,700, or 86.7% of idled workers during the year. Within the services industry, 188,900 education and health workers walked off the job.

That was followed by 171,500 information services workers. About 37,300 workers in other sectors also participated in strikes. Factory workers made up 61,200, or 13.3% of idled workers over the year. There were three local government and five state government strikes involving 91,100 workers.

(Reporting by Lucia Mutikani; editing by Jonathan Oatis)

By Parisa Hafezi, John Irish, Tom Balmforth and Jonathan Landay

DUBAI (Reuters) -Iran has provided Russia with a large number of powerful surface-to-surface ballistic missiles, six sources told Reuters, deepening the military cooperation between the two U.S.-sanctioned countries.

Iran’s provision of around 400 missiles includes many from the Fateh-110 family of short-range ballistic weapons, such as the Zolfaghar, three Iranian sources said. This road-mobile missile is capable of striking targets at a distance of between 300 and 700 km (186 and 435 miles), experts say.

Iran’s defence ministry and the Revolutionary Guards – an elite force that oversees Iran’s ballistic missile programme – declined to comment. Russia’s defence ministry did not immediately respond to a request for comment.

The shipments began in early January after a deal was finalised in meetings late last year between Iranian and Russian military and security officials that took place in Tehran and Moscow, one of the Iranian sources said.

An Iranian military official – who, like the other sources, asked not to be identified because of the sensitivity of the information – said there had been at least four shipments of missiles and there would be more in the coming weeks. He declined to provide further details.

Another senior Iranian official said some of the missiles were sent to Russia by ship via the Caspian Sea, while others were transported by plane.

“There will be more shipments,” the second Iranian official said. “There is no reason to hide it. We are allowed to export weapons to any country that we wish to.”

U.N. Security Council restrictions on Iran’s export of some missiles, drones and other technologies expired in October. However, the United States and European Union retained sanctions on Iran’s ballistic missile programme amid concerns over exports of weapons to its proxies in the Middle East and to Russia.

A fourth source, familiar with the matter, confirmed that Russia had received a large number of missiles from Iran recently, without providing further details.

White House national security spokesperson John Kirby said in early January the United States was concerned that Russia was close to acquiring short-range ballistic weapons from Iran, in addition to missiles already sourced from North Korea.

A U.S. official told Reuters that Washington had seen evidence of talks actively advancing but no indication yet of deliveries having taken place.

The Pentagon did not immediately respond to a request for comment on the missile deliveries.

Ukraine’s top prosecutor said on Friday the ballistic missiles supplied by North Korea to Russia had proven unreliable on the battlefield, with only two of 24 hitting their targets. Moscow and Pyongyang have both denied that North Korea has provided Russia with munitions used in Ukraine.

By contrast, Jeffrey Lewis, an expert with the Middlebury Institute of International Studies at Monterey, said the Fateh-110 family of missiles and the Zolfaghar were precision weapons.

“They are used to point at things that are high value and need precise damage,” said Lewis, adding that 400 munitions could inflict considerable harm if used in Ukraine. He noted, however, that Russian bombardments were already “pretty brutal”.

U.S. AID DELAY WEAKENS UKRAINE’S DEFENCES

A Ukrainian military source told Reuters that Kyiv had not registered any use of Iranian ballistic missiles by Russian forces in the conflict. The Ukrainian defence ministry did not immediately reply to Reuters’ request for comment.

Following the publication of this story, a spokesperson for Ukraine’s Air Force told national television that it had no official information on Russia obtaining such missiles. He said that ballistic missiles would pose a serious threat to Ukraine.

Former Ukrainian defence minister Andriy Zagorodnyuk said that Russia wanted to supplement its missile arsenal at a time when delays in approving a major package of U.S. military aid in Congress has left Ukraine short of ammunition and other material.

“The lack of U.S. support means shortages of ground-based air defence in Ukraine. So they want to accumulate a mass of rockets and break through Ukrainian air defence,” said Zagorodnyuk, who chairs the Kyiv-based Centre for Defence Strategies, a security think tank, and advises the government.

Kyiv has repeatedly asked Tehran to stop supplying Shahed drones to Russia, which have become a staple of Moscow’s long-range assaults on Ukrainian cities and infrastructure, alongside an array of missiles.

Ukraine’s air force said in December that Russia had launched 3,700 Shahed drones during the war, which can fly hundreds of kilometres and explode on impact. Ukrainians call them “mopeds” because of the distinctive sound of their engines; air defences down dozens of them each week.

Iran initially denied supplying drones to Russia but months later said it had provided a small number before Moscow launched the war on Ukraine in 2022.

“Those who accuse Iran of providing weapons to one of the sides in the Ukraine war are doing so for political purposes,” Iranian Foreign Ministry spokesperson Nasser Kanaani said on Monday, when asked about Tehran’s delivery of drones to Russia. “We have not given any drones to take part in that war.”

Rob Lee, a senior fellow at the Foreign Policy Research Institute, a Philadelphia-based think tank, said a supply of Fateh-100 and Zolfaghar missiles from Iran would hand Russia an even greater advantage on the battlefield.

“They could be used to strike military targets at operational depths, and ballistic missiles are more difficult for Ukrainian air defences to intercept,” Lee said.

DEEPENING TIES WITH MOSCOW

Iran’s hardline clerical rulers have steadily sought to deepen ties with Russia and China, betting that would help Tehran to resist U.S. sanctions and to end its political isolation.

Defence cooperation between Iran and Russia has intensified since Moscow sent tens of thousands of troops into Ukraine in February 2022.

Russia’s Defence Minister Sergei Shoigu met the head of Iran’s Revolutionary Guards Aerospace Force, Amirali Hajizadeh, in Tehran in September, when Iran’s drones, missiles and air defence systems were displayed for him, Iranian state media reported.

And last month, Russia’s foreign ministry said it expected President Vladimir Putin and his Iranian counterpart Ebrahim Raisi to sign a broad new cooperation treaty soon, following talks in Moscow in December.

“This military partnership with Russia has shown the world Iran’s defence capabilities,” said the military official. “It does not mean we are taking sides with Russia in the Ukraine conflict.”

The stakes are high for Iran’s clerical rulers amid the war between Israel and Palestinian Islamist group Hamas that erupted after Oct. 7. They also face growing dissent at home over economic woes and social restrictions.

While Tehran tries to avoid a direct confrontation with Israel that could draw in the United States, its Axis of Resistance allies – including Hezbollah in Lebanon and the Houthis in Yemen – have attacked Israeli and U.S. targets.

A Western diplomat briefed on the matter confirmed the delivery of Iranian ballistic missiles to Russia in the recent weeks, without providing more details.

He said Western nations were concerned that Russia’s reciprocal transfer of weapons to Iran could strengthen its position in any possible conflict with the United States and Israel.

Iran said in November it had finalised arrangements for Russia to provide it with Su-35 fighter jets, Mi-28 attack helicopters and Yak-130 pilot training aircraft.

Analyst Gregory Brew at Eurasia Group, a political risk consultancy, said Russia is an ally of convenience for Iran.

“The relationship is transactional: in exchange for drones, Iran expects more security cooperation and advanced weaponry, particularly modern aircraft,” he said.

(Additional reporting by Steve Holland and Phil Stewart in Washington; Writing by Parisa Hafezi; Editing by Daniel Flynn)

By Katie Paul

NEW YORK (Reuters) – A “responsible” AI image generation startup backed by stock photo provider Getty Images has raised $24 million in a Series A funding round, including from top ad agency Publicis Groupe, it said on Wednesday.

Israel-based BRIA, which licenses more than a billion images from stock providers for its system, said in a press release that it would use the cash infusion to expand globally and build out text-to-video generation capabilities.

The investment, while small relative to others in the white hot AI space, makes BRIA an early test case in how licensing deals can provide a path forward in disputes raging over the use of copyrighted content to train generative AI models.

Music labels, artists and other content owners have pointed to licensing as a more palatable approach to generative AI, after big AI companies built their systems using content scraped off the open internet for free.

BRIA said its license-only approach heads off the risk of trademarks and other fraught elements appearing in its generated images, attracting customers in the advertising, marketing and media world including Publicis.

“There is a way to do this that is both responsible and commercial,” CEO Yair Adato told Reuters in an interview.

Getty, which has backed BRIA since 2022, has figured prominently in the disputes around training data.

Last year, Getty sued leading AI image generation company Stability AI for using its photos without a license, which it alleged was “brazen” infringement of its intellectual property “on a staggering scale.”

It also teamed up with chip maker Nvidia last year to build an image generation service trained only on the images in its own library.

Rivals Adobe and Shutterstock likewise offer AI image generators, while all three photo companies license their visuals to Nvidia for its own service.

BRIA fed its model visuals from 18 stock providers, including Getty, Alamy, SuperStock and Envato. It charges customers for access to the platform and shares revenue with the photo companies.

Each time BRIA generates an image, it displays the original licensed images that contributed data toward that output and accounts for how much came from each.

Adato likens the approach to a Spotify model for the AI era, which compensates content owners for their role in enabling the technology.

Controlled training also guards against the technology being used to create misleading visuals that could tarnish brands or influence elections, he said.

BRIA’s model, for instance, is not capable of generating an image of U.S. President Joe Biden because it has never been taught what he looks like, said Adato.

(Reporting by Katie Paul; Editing by Christopher Cushing)

By Amruta Khandekar and Bansari Mayur Kamdar

(Reuters) -The tech-heavy Nasdaq led declines on Wall Street on Wednesday as investors braced for Nvidia’s high-stakes earnings report that could hinder this year’s AI euphoria if results are not stellar, and awaited minutes from the Federal Reserve’s latest policy meeting.

Nvidia shed 1.9% after a more than 4% decline in the previous session ahead of the chip designer’s quarterly earnings, expected after markets close on Wednesday.

The company is expected to post a more than three-fold surge in its fourth-quarter revenue on robust demand for its chips that dominate the market for artificial intelligence (AI).

But analysts have warned that Nvidia’s lofty valuation could make it vulnerable to sharp declines if it delivers anything short of a blowout report, and also spark a broader selloff among technology firms that have benefited from bets on AI.

“(Nvidia) is seen as the lead company in the AI revolution,” said Rick Meckler, partner at Cherry Lane Investments in New Jersey.

“With these elevated prices in the megacap tech space, there’s clearly nervousness about any level of disappointment. Nvidia really needs to not only beat, but have a very strong forecast for it to reaccelerate to the upside.”

The chipmaker has jumped 37.4% so far this year, compared with 5.7% and 3.6% year-to-date gains in the Philadelphia Semiconductor Index and the Nasdaq.

Three of the 11 major S&P sectors were in the red, with rate-sensitive technology stocks down 0.9%, while energy shares outperformed with gains of 1.7%.

The AI-fueled rally on Wall Street this year ran into a rough patch after data last week hinted at sticky inflation and stoked concerns that the Federal Reserve could delay the start of its rate easing cycle.

The January inflation data complicates upcoming U.S. Federal Reserve interest rate decisions, Richmond Fed president Thomas Barkin said on Wednesday.

Minutes from the Fed’s January monetary policy meeting, due at 1400 ET (1900 GMT), will offer further clues on the timing of potential interest rate cuts.

A majority of traders are currently pricing in June as the starting point for rate easing, compared with March at the start of the year, according to the CME Group’s FedWatch tool.

At 11:23 a.m. ET, the Dow Jones Industrial Average was down 35.60 points, or 0.09%, at 38,528.20, the S&P 500 was down 4.60 points, or 0.09%, at 4,970.91, and the Nasdaq Composite was down 67.51 points, or 0.43%, at 15,563.28.

Palo Alto Networks slumped 26.5% after the cybersecurity firm forecast third-quarter billings below analyst estimates.

Shares of other cybersecurity companies such as Fortinet, Zscaler and Crowdstrike Holdings fell between 5% and 14.9%.

Amazon.com gained nearly 1%, with the company set to join the Dow Jones Industrial Average effective next week, replacing Walgreens Boots Alliance. Shares of Walgreens slid 2.6%.

Advancing issues outnumbered decliners by a 1.16-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.76-to-1 ratio on the Nasdaq.

The S&P index recorded 18 new 52-week highs and no new lows, while the Nasdaq recorded 33 new highs and 62 new lows.

(Reporting by Amruta Khandekar and Bansari Mayur Kamdar; Editing by Shinjini Ganguli)

By Stephen Nellis

(Reuters) – Arm Holdings on Wednesday released a new set of blueprints for making chips that it says could cut the time required to develop data center processors to less than a year.

Arm, whose underlying technology is widely used in the semiconductor industry and powers virtually every smartphone in the world, has been working to take market share away from Intel and Advanced Micro Devices in the market for data central processors, or CPUs.

Arm, which is majority owned by Japan’s SoftBank Group, argues that its CPUs will become the preferred pairing with Nvidia’s chips in many artificial intelligence data centers, which has helped drive Arm’s shares up more than 60% this year.

Arm’s technology for creating data center processors is already in use by Amazon.com, Microsoft and Ampere Computing, which supplies chips to Oracle. Arm on Wednesday announced a new generation of designs for the computing “cores” – the most central part of a data center chip.

But the larger announcement was that the cores will be offered as part of what Arm calls a “compute subsystem.” That offering ties together the cores with other offerings from Arm into something closer to a complete chip design. Arm argues that customers can use it to go from an initial idea to a test chip in less than a year.

That’s about half the time of a traditional two-year chip development cycle. Arm said that Microsoft already used the subsystem technology to design its “Cobalt” chip announced last year.

“That’s a huge deal,” Ryan Shrout of chip research firm Shrout Research said of cutting down development time.

Shrout said that one of the biggest challenges for traditional chip firms like Intel and AMD was keeping a steady design cadence. Now, Arm is offering to do that work for anyone willing to pay for its blueprints, even if they aren’t a traditional chip company.

“It’s one of the reasons why you’re seeing Amazon, Meta and Microsoft start to build their own platforms and not just build them once, but iterate on them. They’re coming out with new generations relatively quickly,” Shrout said.

(Reporting by Stephen Nellis in San Francisco; Editing by Christopher Cushing)

By Jonathan Saul

LONDON (Reuters) – A cargo ship abandoned four days ago in the Gulf of Aden after it was hit by missiles fired by Yemen’s Houthis is still floating despite taking in water, and could be towed to nearby Djibouti, industry sources said on Wednesday.

Shipping risks have escalated due to repeated drone and missile strikes in the Red Sea and Bab al-Mandab Strait by the Iran-aligned Houthis since November. U.S. and British forces have responded with several strikes on Houthi facilities but have so far failed to halt the attacks.

The crew of the Belize-flagged Rubymar abandoned the vessel after it was hit on Sunday, and were rescued by another commercial ship.

The vessel was taking in water and its operators were exploring options, the vessel’s maritime security company LSS-SAPU told Reuters on Monday. The vessel’s UK registered company and Lebanese based ship manager could not be located for further comment on Wednesday.

A maritime advisory warned ships in the area to avoid the abandoned vessel.

A U.S. defense official said on Tuesday that the vessel had not sunk.

Two shipping and insurance sources said towing the vessel to Djibouti appeared to be the best course of action.

“Djibouti is the only immediate option where some repairs or recovery would be feasible,” one of the sources said. “It is too risky for a ship in that condition to be towed too far or in more open waters.”

The vessel last reported its position over two days ago, and was headed to the Bulgarian port of Varna, according to data from ship tracking and maritime analytics provider MarineTraffic.

Insurance sources said they could not determine who had insured the vessel, which appeared not to be covered through the London marine insurance market.

A Djibouti port spokesperson did not immediately respond to a request for comment.

The Djibouti Ports & Free Zones Authority said on Feb 19 in a statement on X that its Port Authority completed the safe repatriation of the Rubymar’s 24 crew members – 11 Syrians, six Egyptians, three Indian nationals, and four Filipinos – who were brought to the Djibouti area by the rescue vessel.

“The vessel has on board 21,999 MT (metric tonnes) of fertilizer IMDG class 5.1, very dangerous,” the Authority said, adding the ship’s AIS transponder was switched off and it did not know the coordinates of the vessel.

Despite retaliatory Western attacks on them in Yemen, the Houthis have vowed to continue striking ships they say are linked to Israel, in solidarity with Palestinians until Israeli forces stop their war in the Gaza Strip.

So far, no ships attacked have been sunk or any crew killed but there are growing safety fears.

The UKMTO British navy agency said on Tuesday it had received reports of an explosion and a flash sighted in the southern Red Sea 40 nautical miles west of the Yemen’s northern Hodeidah port, which is located in an area controlled by the Houthis.

“Vessels and crew in the vicinity are reported safe,” UKMTO said. “Vessels are advised to transit with caution.”

(Reporting by Jonathan Saul; Additional reporting by Aaron Ross in Nairobi; Editing by Peter Graff)

By Manas Mishra and Amruta Khandekar

(Reuters) -Shares of Walgreens Boots Alliance fell 3% on Wednesday after the U.S. pharmacy chain operator lost its spot on the Dow Jones Industrial Average to Amazon, marking an end to a short stint for the blue-chip index’s worst performer of 2023.

The replacement comes less than two months after Walgreens nearly halved its dividend payout to conserve cash as it sought to win back market share from rivals and expand beyond its pharmacies.

The move “is not the first time by a long shot that the index has moved away from a company that has lost its luster, to a company with perceived greater prospects by investors”, said Rick Meckler, partner at Cherry Lane Investments, in New Jersey.

Adding Amazon gives the Dow a higher expected return and adds volatility as the stock is likely to have greater price movement than Walgreens, he said.

The switch was prompted by Walmart’s decision to split its shares, which would reduce the retailer’s weightage on the index.

The Dow is weighted based on the share prices of its components, not on each company’s overall market value.

Walgreens joined the Dow in 2018, replacing industrial conglomerate General Electric. Since then, the stock has lost about 65% of its value.

Walgreens has appointed new top executives, shuttered unprofitable stores and unveiled the dividend cut in January as it deals with low consumer spending, a drop in COVID-19 product sales and a slow ramp-up of its nascent healthcare unit.

Shares of Walgreens trade at a forward price-to-earnings ratio of 6.54, compared with 9 for larger rival CVS Health. They fell 2.9% to $21.71 in premarket trading.

S&P Dow Jones indices said on Tuesday that adding Amazon would increase consumer retail exposure, reflecting “the evolving nature of the American economy”. The change is effective next week.

Amazon’s shares rose marginally to $168.14 before the bell.

(Reporting by Manas Mishra in Bengaluru; Editing by Shilpi Majumdar)

By Noel Randewich and Caroline Valetkevitch

(Reuters) -Amazon is set to join the Dow Jones Industrial Average, replacing Walgreens Boots Alliance effective next week, S&P Dow Jones Indices said on Tuesday.

Shares of Amazon rose 1.3% in extended trade after the announcement, while Walgreens dipped 3%.

Adding Amazon will increase consumer retail exposure as well as other areas in the Dow, and the move was prompted by Walmart’s decision to split its stock, S&P Dow Jones Indices said in a news release.

The Dow, which debuted in 1896, is widely followed by retail investors, making it an important reflection of the U.S. stock market. Institutional investors more frequently benchmark their performance against the S&P 500.

As well as dominating online retail, the Seattle company is a major player in cloud computing, entertainment and other industries.

“Amazon is almost a hybrid name. It’s one of the names that falls into different categories. It in many ways exemplifies what the Dow stands for in terms of representing commerce across the United States,” said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina.

The change takes effect at the open of trading on Monday.

Walmart will remain part of the Dow, although its upcoming three-for-one stock split, effective after market close on Friday, will reduce that retailer’s weight in the index.

The Dow is weighted based on the share prices of its components, not on each company’s overall market value.

Additionally, Uber Technologies will join the Dow Jones Transportation Average, replacing JetBlue Airways Corp, giving that index exposure to the ride-hailing industry, S&P Dow Jones Indices said.

Amazon’s addition to the Dow is the first since 2020, when Salesforce, Amgen and Honeywell International replaced Exxon Mobil, Pfizer and Raytheon Technologies.

Walgreens joined the Dow in 2018, replacing General Electric.

(Reporting by Noel Randewih in Oakland, Calif, Caroline Valetkevitch in New York and Bhanvi Satija in Bengaluru; Editing by Pooja Desai and Christopher Cushing)