Dow Industrials Gets Rid Of GM With Citigroup
Dow Jones and Company stated Monday that it would be adding two additional businesses to its industrial average. The two businesses are Travelers in addition to Cisco Systems. However, when two go in the average, two have to leave.
Given the reports that has occurred with GM over the earlier few months, it is a no brainier that GM would be removed 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 corporations in the average.
Citigroup has had a pretty bumpy year with subprime lending, the credit catastrophe, and ultimately the downturn taking huge cuts from Citigroup. Citigroup is the 2nd financial company to be dropped from the average throughout this downturn, the first was AIG. AIG was taken off the average in September at which time the government took an 80% interest in the company and lent it several billion dollars in bailout cash.
The Dow industrial average includes 30 stocks. These stocks are a measure of the marketplace and what the general public regularly looks at to evaluate the health of the markets as well as the economy. It is currently 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 changes will start next Monday.
Citi has been sitting in the Dow industrial average for 12 years, when it was listed as Citicorp. It became Citigroup in 1998 when Travelers Group merged with Citicorp. In 2002, Travelers was spun off yet again and has been a separate business ever since. So, it is a bit odd that the parent business has fallen off the average and has been out performed by its subsidiary.
In reality, Travelers is accepting AIG’s formerly held location in the average. The center product of both corporations is the similar; casualty insurance sales.
GM has to get its actions composed to even be considered before it is listed on the average again. It will likely be years for the once sturdy auto corporation to see the tops of any list. However, I do believe that bankruptcy was a step in the correct direction. If it were left up to its own devices, GM would have been going into liquidation mode a year ago, if the state wouldn’t have come in. Worse, if they didn’t file for insolvency and couldn’t reform, the government would have lost all of our capital in the GM “risk” and would be heaving money into a limitless pit.
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