Nike's removal from the S&P 100 this week has reignited a long-simmering question on Wall Street: does the sportswear giant still belong in the Dow Jones Industrial Average? The company was dropped from the S&P 100 ahead of September 21 trading, ending an 18-year stint in that large-cap index. Now, with its shares trading around $36 and carrying a tiny 0.4% weight in the Dow, traders are wondering if Nike might be the next blue-chip name to get the boot.
Why Nike was dropped from the S&P 100
The S&P 100 is a subset of the S&P 500 that tracks 100 of the largest U.S. companies by market value. S&P Dow Jones Indices, the firm that manages both the S&P 100 and the Dow, periodically rebalances its indexes to reflect changes in the market. Nike's removal was part of a routine quarterly reshuffle, but analysts say the underlying reason is clear: years of weak stock performance.
Nike's sales growth has slowed as competition from rivals like Adidas and upstart brands such as On and Hoka has intensified. The company has also struggled with inventory gluts and a shift in consumer preferences. As a result, its share price has lagged the broader market, and its market capitalization has shrunk relative to other large-cap names. That made it a natural candidate for removal from an index that aims to represent the biggest and most liquid U.S. companies.
The Dow's unique price-weighted structure
The Dow Jones Industrial Average is different from most other major indexes. While the S&P 500 and the Nasdaq Composite are weighted by market capitalization—meaning bigger companies have a larger influence—the Dow is price-weighted. That means stocks with higher share prices have a bigger impact on the index's daily moves, regardless of the company's actual size.
Nike's share price of roughly $36 is among the lowest in the Dow. Its 0.4% weight is the smallest of any component. In a price-weighted index, a low-priced stock like Nike has very little sway over the average's performance. That has led some traders to argue that Nike's presence in the Dow is more of a legacy than a practical necessity.
Index changes are not uncommon. The Dow's composition has shifted over time as companies merge, go private, or fall out of favor. For example, in 2020, Exxon Mobil was removed after decades in the index, replaced by Salesforce. More recently, in 2024, Amazon joined the Dow, replacing Walgreens Boots Alliance. Each change is made by the index committee, which considers factors like reputation, sector representation, and the need to keep the index diversified.
What it means for investors
For everyday investors, the immediate impact of Nike's S&P 100 exit is minimal. Index funds that track the S&P 100 will sell their Nike shares, but that is a routine rebalancing event. The bigger question is whether Nike will be removed from the Dow, which would have broader implications.
If Nike were dropped from the Dow, index funds that track the Dow would need to sell their Nike holdings and buy whatever stock replaces it. That could create some short-term selling pressure on Nike shares, but the effect would likely be modest given Nike's small weight. More importantly, removal from a major index can be seen as a negative signal about a company's long-term prospects, potentially affecting investor sentiment.
For investors holding Nike stock, the key takeaway is that the company's fundamentals—not just its index membership—will determine its future performance. Nike is still a global brand with strong cash flows, but it faces real challenges. The company has been working to clear excess inventory, refresh its product lineup, and win back customers who have shifted to competitors. Whether those efforts succeed will matter far more than which index the stock belongs to.
What to watch next
The next major catalyst for Nike will be its quarterly earnings report, which typically comes out in late September or early October. Investors will be looking for signs that sales growth is stabilizing and that margins are improving. Any guidance on future demand will be closely scrutinized.
Also worth watching is whether S&P Dow Jones Indices announces any changes to the Dow in the coming months. The committee does not follow a fixed schedule, but it has made changes in the past when a stock's price or sector representation became problematic. If Nike's share price continues to languish, the pressure to replace it could grow.
In the meantime, investors should remember that index changes are a normal part of market evolution. Companies rise and fall, and indexes adjust accordingly. For those who own Nike through a broad index fund, the S&P 100 exit is a non-event. For those who own the stock directly, the focus should be on the company's business performance, not its index membership.
As always, diversification is key. No single stock—even one as iconic as Nike—should dominate a portfolio. And while the Dow's price-weighted quirks can make for interesting headlines, they don't change the fundamental rules of investing: buy quality companies at reasonable prices, and hold for the long term.
