Inclusion in the Dow does not guarantee a bump to your share price

Good morning.  

Salesforce stock soared a stunning 27% yesterday—its biggest jump ever—on the day after it was announced that it would be added to the Dow Jones index. Amgen and Honeywell, which are also being added to the Dow, rose modestly as well, while the stocks being bumped—Exxon, Pfizer, and Raytheon—all fell. That makes sense, since being in the index assures companies an extra influx of money from index funds.

But here’s an interesting fact: In recent years, those added to the Dow have actually performed worse than those that are dumped.  Looking at the last decade, companies added to the Dow gained only 0.3%, while those removed grew 10.37%. Starting from 1999, those added lost 10.1% and those booted lost only 2%. So maybe being added to the index isn’t such a good thing after all?

Salesforce investors seem confident their stock will buck the historical trend—and that confidence was fed by the company’s strong earnings report on Tuesday. Meanwhile, Tesla’s ever confident investors sent the electric car maker’s market value over $400 billion yesterday. That makes it more valuable than Walmart— the world’s biggest company.

Separately, 84% of the CFOs surveyed by Deloitte for their quarterly survey, coming out later today, say the stock market is overvalued…the second highest reading in the survey’s history. Only 2% believe it is undervalued.  

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com