Alcoa Stock Among Three Kicked From Dow Jones
Alcoa stock was one of three companies dropped from the Dow Jones Industrial Average. The drop will happen next week and is considered the biggest shake-up of the 30-stock index in the past 10 years.
Alcoa has been part of the Dow Jones for 54 years, but it will be replaced next week by Nike Inc. Bank of America Corp. and Hewlett-Packard Co. will also lose their spots.
Visa Inc. will replace HP and securities firm Goldman Sachs Group will take over Bank of America’s spot, reports The Wall Street Journal.
The Dow is, perhaps, the most recognized part of Wall Street, and is what many people use to decide how healthy the United States’ economy is.
The changes to the Dow, including the ouster of Alcoa stock, will take place at the close of trading on September 20. S&P Dow Jones Indices LLC, the company that oversees the Dow, released a statement, explaining their reasoning for the change.
The statement explained that the changes “were prompted by the low stock price of the three companies slated for removal and the Index Committee’s desire to diversify the Index Committee’s desire to diversify the sector and industry group representation of the index.”
The New York Times notes that the removal of Alcoa, Bank of America, and Hewlett-Packard won’t affect the level of the index, according to the Dow. This is because the company will adjust the underlying calculation.
The Dow currently has 30 blue-chip companies as members. It has shown strength since the financial crisis and has recovered well. But for Alcoa, an aluminum company, its exclusion is a symbolic comedown.
The company released a statement about the change, assuring customers and stockholders, “The composition of the Dow Jones industrial average has no impact on Alcoa’s ability to successfully execute our strategy We are focused on the things we can control.”
While Alcoa stock was included in the Dow Jones for more than 50 years, Hewlett-Packard and Bank of America were more recent entrants.
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