Dow Industrials: New Kids on the Stock


The adjustment happened last Friday, although it was made effective at the open of trading on Monday. “The index changes were prompted by the low stock price of the three companies slated for removal and the index committee’s desire to diversify the sector and industry group representation of the index,” S&P Dow Jones Indices said on Tuesday.

While their performance has been mixed this year –H-P is up more than 50%, while Alcoa is down almost 7%– all three departing stocks have underperformed the broader stock market in recent years, according to the WSJ.

The changes are the biggest in the index since April 8, 2004. However, they won’t cause any disruption in the level of Dow Industrials, because the divisor used to calculate the Dow from its components’ prices on their respective home exchanges will be changed.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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