Dow Jones announced this morning that Kraft Foods will replace American International Group Inc. (AIG) in the Dow Jones Industrial Average. The move will take effect when trading opens on Monday, September 22.
AIG was taken over by the federal government Tuesday night. Changes to the Dow Jones Industrial Average are rare, said Dow Jones Indexes editor John A. Prestbo, “although this time change was forced by the effective nationalization of AIG and its very low stock price.” AIG had been listed in the index since April 1, 2004.
The 112-year-old stock index was last changed on Feb. 19, when two stocks out of 30 were replaced. “The Dow,” created by Charles H. Dow created as a 12-stock index in May 1896, is today one of the best-known stock-market indices.
The move leaves the Dow underweighted in financial firms. “We are refraining at this point from adding another stock in the financial industry because of the extremely unsettled conditions,” explained Robert Thomson, managing editor of the Wall Street Journal, who oversees the makeup of the Dow.
Thomson said that adding Kraft to the Dow would add food products to the index, which currently are not represented at all.