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Dow Jones and Company stated Monday that it would be adding two additional corporations to its industrial average. The two companies are Travelers in addition to Cisco Systems. Needless to say, when two go into the average, two have to leave.
Given the reports that has happened with GM over the past few months, it is a no brainier that GM would be cut from the average. However, Citigroup was in addition given the boot.
Travelers was once a subsidiary of Citigroup and will help preserve the representation of financial businesses in the average.
Citigroup has had a rather bumpy year with subprime lending, the credit crisis, and ultimately the recession taking huge cuts from Citigroup. Citigroup is the 2nd fiscal business to be dropped from the average throughout this recession, the first being AIG. AIG was taken off the average in September at which time the government took an 80% investment in the business and lent it several billion dollars in bailout money.
The Dow industrial average is made up of 30 stocks. These stocks are a measure of the market and what the public customarily looks at to determine the health of the markets as well as the economy. It is at present made up of (on top of Travelers and Cisco) 3M (MMM), Alcoa (AA), American Express (AXP), At&t (T), Bank of America (BAC), Boeing (BA), Caterpillar (CAT), Chevron Corporation (CVX), Coca-Cola (KO), DuPont (DD), ExxonMobil (XOM), General Electric (GE), Hewlett-Packard (HPO), The Home Depot (HD), Intel (INTC), IBM (IBM), Johnson & Johnson (JNJ), JPMorgan Chase (JPM), Kraft foods (KFT), McDonalds (MCD), Merk (MRK), Microsoft (MSFT), Pfizer (PFE), Procter & Gamble (PG), United Technologies Corporation (UTX), Verizon Communications (VZ), Wal-Mart (WMT), and Walt Disney (DIS).
The mix ups will start next Monday.
Citi has been on the Dow industrial average for 12 years, at which time it was listed as Citicorp. It became Citigroup in 1998 when Travelers Group merged with Citicorp. In 2002, Travelers was spun off once more and has been a unconnected company ever since. So, it is a bit bizarre that the parent corporation has fallen off the average and has been shown the door by its subsidiary.
In actuality, Travelers is accepting AIG’s formerly held spot in the average. The center product of both businesses is the similar; casualty insurance sales.
GM has to get its actions organized to even be considered before it is put back on the average once more. It will probably be years for the once strong auto corporation to see the tops of any list. However, I do consider that bankruptcy was a move in the right direction. If it were left up to its own devices, GM would have been filing for bankruptcy a year ago, if the state wouldn’t have come in. Worse, if they didn’t file for bankruptcy and couldn’t reorganize, the government would have lost all of our capital in the GM “venture” and would be heaving money into a unlimited pit.
Find the most recent on Dow Industrial Average while reading up on a number of stock information.
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