Dow Jones Shake Up, Out Goes Bank of America, H-P and Alcoa

Andrew Klips |

The S&P Dow Jones Indices LLC, a part of McGraw Hill Financial (MHFI) announced Tuesday morning that there are changes coming to the 117-year-old, 30-company Dow Jones Industrial Average Index on Friday, September 20, 2013.  The company cited low stock prices and the desire to diversify the sector and industry group representation of the Dow as the reason for the changes.

In the biggest Dow component swap in nearly a decade, Goldman Sachs Group Inc. (GS) is replacing Bank of America (BAC) . Hewlett-Packard Co. (HPQ) will be replaced by Visa, Inc. (V) and Alcoa, Inc. ($AA) is being bumped for Nike Inc. (NKE) .

So far in 2013, shares of BAC are up 25.7 percent, HPQ is up 55.6 percent and AA is down 7 percent.

The changes will be effective on Monday, September 23 and won’t have and impact on the level of the Dow because the divisor used to calculate the index from its component’s prices on their respective home exchange will be changed prior to that date, according to today's statement.

The Dow Jones Industrial Index is overseen by S&P Dow Jones Indices LLC, CME Group Inc. (CME) and Dow Jones & Co., a division of News Corp. (NWSA) .

The Dow’s cage was last rattled to this extent in 2004 when AT&T Inc. (T) , International Paper Co. (IP) and Eastman Kodak Co. (EKDKQ) were booted in favor of American International Group, Inc. ($AIG), Pfizer Inc. (PFE) and Verizon (VZ) .  AT&T made its way back to the blue chip index, but International Paper and bankrupt Eastman Kodak never did.  AIG was eventually replaced by Kraft (KRFT) (who was later replaced by UnitedHealth (UNH) , but Pfizer and Verizon remain.

As of the effective date, the Dow Jones Industrial Average components:

  • 3M Co. (MMM)
  • American Express Co. (AXP)
  • AT&T (T)
  • Boeing Co. (BA)
  • Caterpillar Inc. (CAT)
  • Chevron Corp. (CVX)
  • Cisco Systems Inc. (CSCO)
  • E.I. du Pont de Nemours and Co. (DD)
  • Exxon Mobil Corp. (XOM)
  • General Electric Co. (GE)
  • Goldman Sachs Group Inc. (GS)
  • Home Depot Inc. (HD)
  • Intel Corp. (INTC)
  • International Business Machines Co. (IBM)
  • Johnson & Johnson (JNJ)
  • JPMorgan Chase and Co. (JPM)
  • McDonald’s Corp. (MCD)
  • Merck & Co. Inc. (MRK)
  • Microsoft Corp. (MSFT)
  • Nike Inc. (NKE)
  • Pfizer Inc. (PFE)
  • Proctor & Gamble Co. (PG)
  • The Coca-Cola Co. (KO)
  • Travelers Companies Inc. (TRV)
  • United Technologies Corp. ($UTX)
  • UnitedHealth Group Inc. (UNH)
  • Verizon Communications Inc. (VZ)
  • Visa Inc. (V)
  • Wal-Mart Stores Inc. (WMT)
  • Walt Disney Co. (DIS)

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
MHFI McGraw Hill Financial Inc. n/a n/a n/a 0
AA Alcoa Inc. 31.31 0.41 1.33 3,064,978
V Visa Inc. 79.28 -0.03 -0.04 13,320,094
GS The Goldman Sachs Group Inc. 241.45 5.89 2.50 7,344,112
NWSA News Corporation 11.92 0.09 0.76 1,957,806
NKE Nike Inc. 51.55 -0.55 -1.06 9,260,850
BAC Bank of America Corporation 22.95 0.38 1.68 182,693,989
HPQ HP Inc. 16.16 0.01 0.06 9,581,858
CME CME Group Inc. 122.29 1.44 1.19 2,799,681
ERGZF Erg Spa Ord n/a n/a n/a 0

Comments

Emerging Growth

Veritas Pharma Inc.

Veritas Pharma Inc, formerly Seashore Organic Medicine Inc is an emerging producer and distributor of medical marijuana.

Private Markets

Snapwire

A peer-to-Peer authentic photo marketplace disrupting the $10B commercial photography industry.

GoCoin

Blockchain currencies (e.g. Bitcoin) provide a new disruptive way to transfer value between parties over the internet as opposed to going through banks. GoCoin provides online merchants with a suite…