By Ines Ferre

What happened: Alphabet (GOOGL, GOOG) shares were up less than 1% in pre-market trading on Wednesday.

What's behind the move: The tech giant will join the Dow Jones Industrial Average (DJI) on June 29, replacing Verizon Communications (VZ) in a move aimed at better reflecting growing areas of the US economy.

Alphabet's inclusion will "broaden and strengthen the DJIA's exposure" to areas such as artificial intelligence, cloud computing, healthcare technology, and digital advertising said the S&P Dow Jones Indices statement.

The release noted that Alphabet's "larger market capitalization and share price, together with the breadth of its businesses," make it a stronger representative of the Communication Services (XLC) sector.

Because the Dow is weighted by stock price, Verizon's lower-priced shares contribute relatively little to the index's performance. Verizon shares are up nearly 15% year-to-date.

What else you need to know: Honeywell International (HON) will remain in the index after completing the spin-off of its aerospace business on June 29. Following the transaction, the parent company will be renamed Honeywell Technologies, while Honeywell Aerospace will not be added to the DJIA.

Alphabet has been spending heavily on AI, recently issuing nearly $85 billion in shares to fund AI spending.

Shares have come under pressure in recent sessions as the Federal Reserve adopted a more hawkish tone on inflation and investors locked in gains amid concerns over elevated valuations.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

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