Dow shakeup: Citi, GM out, Travelers and Cisco in
Filed under: Company News, Investing
The Dow Jones Industrial Average of 30 blue-chip stocks will have a couple new members starting next week. General Motors (GM) and Citigroup (C) will exit next Monday, to be replaced by Travelers (TRV) and Cisco (CSCO). GM's bankruptcy Monday explains its departure. Citi is leaving because "the bank is in the midst of a substantial restructuring which will see the government with a large and ongoing stake," said Dow Jones editor-in-chief Robert Thomson in The Wall Street Journal. "We genuinely hope that once the bank has refashioned itself that we will again be able to consider it for inclusion -- Citigroup is a renowned institution, not only in this country, but around the world."
There's a touch of irony to the moves for long-time watchers of Citigroup. It was Citi's 1998 merger with Travelers that created a "financial supermarket" that was supposed to provide customers with easy access to banking, insurance and brokerage services all in one convenient stop. But the marriage proved unworkable and Travelers was spun off in 2002.
Citi's and GM's departure from the DJIA had been anticipated for months, and while market watchers sometimes tabbed Cisco as a potential replacement, Travelers wasn't on nearly as many people's short list of potential candidates.
Both Cisco and Travelers have outperformed the S&P 500 and the DJIA over the past year. Travelers fell 18.4 percent and Cisco dropped 30.8 percent over that span, compared with a 32.7 percent decline for the Dow and a 34.4 percent drop for the broader S&P 500.
Update: Not only is General Motors getting the boot from the Dow, it will also be replaced in the S&P 500. Education company Devry will take GM's place after the market closes Tuesday.
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Reader Comments (Page 1 of 1)
6-01-2009 @ 3:00PM
Steve in DC said...
Next month... It will be the "Dollar Store" that is added to the DOW. Sheesh
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6-01-2009 @ 7:30PM
mickey said...
Yes but the president says that GM can keep its flashy disgustingly overbearing expensive totally extravagant wasteful flamboyant arrogant in your face high rise office building, not to mention they are offering early retirement to hourly employees, using taxpayer money to do it, instead of just cutting them loose like the other people in this country have had happen to them. Special treatment for car people.
6-01-2009 @ 8:48PM
peter said...
leaving citi in the hands of the injun is suicide.
Reply
6-01-2009 @ 10:12PM
sgentilejr said...
The Dow Jones Industrial Average or DOW is a total and complete scam. Nothing but at scam that is manipulated by those people who run it to make things look better than they really are. The DOW today is absolutely nothing like it was 30 years ago so no real comparisons can be made in regards to if it is up or down over the past 30 years since even time any company in the DOW gets into trouble it is replaced by another company that is doing better financially. It is a scam and nothing more. It is done to make investing in stock appear safer than it really is and it is also manipulated in this manner so they can falsely say the DOW is up 300% (or whatever) in the last 20 years when many of the stocks in the DOW have actually been replaced over the past 30 years so no real comparison can be made between the DOW today and the DOW 30 years ago. Out with the bad and in with the good is comparing apples to oranges. Out with the bad and in with the good is manipulating the DOW.
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