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As of June 8, Dow Jones & Company replaced two of the 30 stocks in the Dow Jones Industrial Average (DJIA), largely as a result of the recession.
General Motors and Citigroup were both removed due to their recent financial troubles. Despite General Motors’ presence in the Dow throughout most of its history, Robert Thomson, managing editor of the Wall Street Journal, said that its recent bankruptcy filing was grounds for automatic removal. He added that Citigroup’s restructuring in the wake of the financial crisis and the government’s substantial stake within the company were the main reasons for its removal.
Cisco Systems, Inc. took GM’s spot, while property and casualty insurer The Travelers Companies, Inc. replaced Citigroup. Thomson said adding Travelers to the average’s component list would restore its representation of the financials sector, after the removal of AIG last year and the removal of Citigroup. According to Thomson, Cisco was added because of the relevance of its products in the current information age.
The DJIA’s divisor was adjusted accordingly after the component change to ensure the continuity of the index.
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2009
