Dow Jones & Co. today announced that Bank of America Corp. and Chevron Corp. will replace Altria Group, Inc., and Honeywell International, Inc., in the Dow Jones Industrial Average. The changes will be effective with the opening bell on February 19. This marks the first changes to the 111-year-old stock index since three stocks were replaced on April 8, 2004.
"The catalyst for these changes is the restructuring in progress at Altria, which will result in a much smaller and more narrowly focused company," said Marcus W. Brauchli, managing editor of The Wall Street Journal. The Journal's top news editor oversees the makeup of "The Dow," which Charles H. Dow created as a 12-stock index in May 1896
Honeywell is out for two reasons: it's the smallest of the industrials in terms of revenue and earnings; and the role of industrial companies relative to the overall stock market has shrunk in recent years.
As part of the Dow re-evaluation, Brauchli noted that the financials industry was under-represented-notwithstanding the current turbulence-and that the oil and gas industry's growing importance to the world economy called for another company to join ExxonMobil Corp. on the index.
Altria, formerly Philip Morris Cos., has been in the industrial average since Oct. 30, 1985. It adopted its current name in 2003. Last year it spun off Kraft Foods, Inc. It has announced the spin-off next month of Philip Morris International, Inc., which will leave it as a purely domestic tobacco company.
Chevron has been in the industrial average twice before. The first time, as Standard Oil Co. of California, was from February 1924 to August 1925. The company re-joined The Dow in 1930, but was replaced on Nov. 1, 1999. The Chevron name was adopted in 1984.