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Dow Jones 30

The DIA presents a slightly different challenge today. Announced today, the component mix of the most visible stock index in the world is changing.

Dow Jones replaces 3 stocks in benchmark index
By Elizabeth Lazarowitz

NEW YORK (Reuters) - Dow Jones & Co. on Thursday dumped three of America's oldest companies from its benchmark Dow Jones industrial average, replacing them with firms it said reflected growth in the financial and health care sectors.

AT&T Corp., Eastman Kodak Co. and International Paper Co. will be replaced by American International Group Inc., Pfizer Inc., and Verizon Communications, Dow Jones said.

Shares of the three newcomers ticked higher in midday trading, while investors gave the outgoing companies a cool reception.

The shift was made to "recognize trends within the U.S. stock market, including the continued growth of the financial and health care sectors and the diminishing relative weight of basic materials stocks," Paul Steiger, managing editor of the Wall Street Journal, said in a news release.

The changes, which will become effective at the open of trading on April 8, are the first shifts in the 107-year-old stock index since 1999.

So, on an interm basis at least, we might expect the DOW 30 to perform slightly differently than the broader market as mutual funds and indexers work through the process of rebalancing their portfolios to the new mix.

Consequently it is not much of a surprise that the DJ30 is performing weaker than the NDX or SPX, and has so far failed to find support above yesterday's highs.

04.04.01 14:59 #