S&P Global is removing Nike from the S&P 100 effective September 21, part of a quarterly rebalancing that also drops Honeywell Aerospace, Simon Property Group, and Colgate-Palmolive while adding Dell Technologies, Palo Alto Networks, Arista Networks, and Sandisk. The move revives questions about whether Nike could next lose its spot in the Dow Jones Industrial Average, where it is now the lowest-weighted component.
The index operator announced Nike's removal from the S&P 100, effective Sept. 21, as part of its quarterly rebalancing. Honeywell Aerospace, Simon Property Group, and Colgate-Palmolive are also being removed, while Dell Technologies, Palo Alto Networks, Arista Networks, and Sandisk are being added.
Why Nike lost its S&P 100 seat
The S&P 100 is a curated set of blue-chip names across sectors, not simply the 100 largest S&P 500 companies by market cap. Nike had kept its place on industry leadership rather than size, but it is now the 213th-highest-weighted company in the S&P 500 and the lowest-ranked component in the iShares S&P 500 100 ETF, which uses the S&P 100 as its benchmark. Meanwhile, Dell, Palo Alto Networks, Arista, and Sandisk have all risen into the top 50 S&P 500 components by market cap.
Nike's stock is at its lowest level in more than a decade, with operating margins down from the low- to mid-high teens before the pandemic to under 9% today. The company faces supply chain and corporate strategy setbacks, slowing growth in China, tariffs, pressured domestic consumer spending, and stronger competition.
Under its Win Now turnaround plan, Nike has cut costs and rebalanced its wholesale and direct-to-consumer strategy. For fiscal 2026, which ended May 31, wholesale revenue grew 4% year over year, with double-digit growth in North America, though competition and the China slowdown remain unresolved.
Dow seat now looks shakier too
Since Alphabet replaced Verizon Communications in the Dow this past June, Nike has become the lowest-ranked component in the price-weighted Dow Jones Industrial Average, which holds just 30 stocks. The index has grown more tech-focused in recent years, adding Nvidia and Amazon in 2024 and Alphabet this year, and possible future candidates include Broadcom, Meta Platforms, Tesla, and Space Exploration Technologies.
The Dow has traditionally favored industry-leading dividend payers, but that criterion appears to carry less weight now: Alphabet and Nvidia both yield less than 0.5%, and Amazon pays no dividend at all. Nike, by contrast, has raised its dividend for 24 consecutive years and yields 4.3%, though that payout could come under pressure if it absorbs too much of Nike's free cash flow.
With the S&P 500 and Dow hovering near record highs, the Fool's Daniel Foelber argues underperforming stocks like Nike have less room for grace, since it now sits closer to the median S&P 500 component weight and makes up a mere 0.4% of the Dow. He believes it is only a matter of time before Nike is removed from the Dow, and that investors may be better off waiting for a sustained turnaround before buying the stock.
Source: Fool
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