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These changes are the first in the 111-year-old stock index since April 8, 2004, when three stocks out of 30 were replaced.
"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 and today is the best-known stock-market barometer in the world.
"As usual when we make any change we review all the stocks," Mr. Brauchli said. "In doing so, we saw 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 representative to join Exxon Mobil Corp.," he said.
John A. Prestbo, editor of Dow Jones Indexes, said, "There are no pre-determined criteria for a stock to be added or deleted, though we intend that all components be established U.S. companies that are leaders in their industries." For the sake of continuity, composition changes are intentionally rare, Mr. Prestbo said.
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.
Honeywell is being dropped because it is the smallest of the industrials in terms of revenue and earnings. Additionally, the role of industrial companies relative to the overall stock market has been shrinking in recent years, Mr. Brauchli said. AlliedSignal acquired Honeywell in late 1999 and adopted that name for the new entity. The predecessor of AlliedSignal was Allied Chemical & Dye Corp., formed in 1920 and added to The Dow on Dec. 7, 1925.
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.
The changes won't cause any disruption in the level of the index. The divisor used to calculate The Dow from its components' prices on their respective home exchanges will be changed prior to the opening on February 19. This procedure prevents any distortion in The Dow's reflection of the U.S. stock market.
For more information, see the web site of Dow Jones Indexes at http://www.djindexes.com. The Dow Jones Transportation Average, Dow Jones Utilities Average and Dow Jones Composite Average also are members of the Dow Jones Averages family.
Additions to and deletions from the Dow Jones Industrial Average do not in any way reflect an opinion on the investment merits of the companies involved.
PRESS BRIEFING
A press briefing will be held today and is open to all journalists. Mr. Prestbo will summarize the changes and be available for questions at 10:45 am.
Dial-in number for U.S.-based media: (800) 288-8974
Dial-in number outside the U.S.: (612)332-0342
Journalists may e-mail questions regarding this press release to PR-Indexes@dowjones.com
Note to Editors:
About Dow Jones Indexes
A full-service index provider, Dow Jones Indexes develops, maintains and licenses indexes for use as benchmarks and as the basis of investment products. Best known for the Dow Jones Industrial Average, Dow Jones Indexes also is co-owner of the Dow Jones STOXX indexes, the world's leading pan-European indexes, and together with Wilshire Associates, provides the Dow Jones Wilshire Global Index family, which is anchored by the Dow Jones Wilshire 5000 and covers more than 12,000 securities in 59 markets. Beyond equity indexes, Dow Jones Indexes maintains a number of alternative indexes, including measures of the hedge fund and commodity markets. Dow Jones indexes are maintained according to clear, unbiased and systematic methodologies that are fully integrated within index families. www.djindexes.com
Dow Jones & Company (www.dowjones.com) is a News Corporation company (NYSE:NWS) (NYSE:NWS.A) (Amex:NWS) (Amex:NWSLV) (www.newscorp.com). Dow Jones is a leading provider of global business news and information services. Its Consumer Media Group publishes The Wall Street Journal, Barron's, MarketWatch and the Far Eastern Economic Review. Its Enterprise Media Group includes Dow Jones Newswires, Dow Jones Factiva, Dow Jones Client Solutions, Dow Jones Indexes and Dow Jones Financial Information Services. Its Local Media Group operates community-based information franchises. Dow Jones owns 50% of SmartMoney and 33% of STOXX Ltd. and provides news content to radio stations in the U.S.
The Dow Jones logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=4578
This news release was distributed by PrimeNewswire, www.primenewswire.com
SOURCE: Dow Jones Indexes
Dow Jones Indexes/STOXX press office: New York: +1-212-597-5720 Frankfurt: +49-69-29-725-290
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