- Bank of America, HP and Alcoa are the 3 stocks that have been removed from the Dow Jones and replaced by Goldman Sachs, VISA and Nike. The change, which will go into effect after the close of trading on Sept. 20.
- The decision to remove the three companies was prompted by their sagging stock prices and the index committee’s desire to diversify the mix of companies represented.
- Bank of America is trading below its pre-level crisis also with its many legal issues. Alcoa’s demand has shrinked, the company has contended with a global slump in aluminum demand. HP is fighting to turn around its business, in an example of its continuing woes, the company took a 79 percent write-down last year on its disastrous acquisition of the British software company Autonomy. The committee took these reasons under considerations and decided to replace them with better functioning stocks.
- Criteria for companies are subjective. A Dow member must have an excellent reputation and demonstrate sustained growth as well as be of interest to a large number of investors.
Categories: Capital Markets