Stock shocker: Dow Jones drops Bank of America, HP, Alcoa
Under-performers will be dropped from the New York Exchange's
benchmark Dow 30 in the index's first switch-up in a year.
Changes will come into effect at the close of trading on September 20. The reshuffle was "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 in a statement.
Bank of America, which has been the center of multiple investor
fraud investigations, saw its stock drop near $14.00 per share,
compared to pre-crisis value of $50.00.
Alcoa has been part of the Industrial Average for over 54 years, but a world-wide decline in metals prices has hit the company hard. The stock closed at $8.08 Monday, with dividends shrinking 29.31 percent over the last five years. Nike, the athletic goods supplier, will replace Alcoa.
Though it has posted a strong performance in 2013 –up more than
57 percent- Hewlett-Packard will be replaced.
August marked S&P’s worst month since May 2012, however the
S&P Dow Jones said the shake up won’t affect the performance
of the index, which is up 15% overall.
Goldman Sachs' shares climbed 3.16 percent, Visa added 1.79
percent, and Nike rose 1.70 percent as of 10:00am in New York.
Alcoa's shares dropped 0.12 percent, HP is down 0.85 percent,
while Bank of America is up 1.1 percent.
The blue-chip index is price-weighted, and the performance is
based on a company's stock price, and not market capitalization.
Stocks are selected by editors of the Wall Street Journal, which
is owned by New Corp, which owns stakes in the indices.
Stocks are chosen for the average by a committee that includes
editors of the Wall Street Journal,