Dow Jones announces biggest shake-up in a decade as Goldman Sachs, Visa and Nike join index
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In the biggest shake-up of the Dow Jones industrial average in nearly a decade, Goldman Sachs, Visa and Nike will join the blue-chip index, replacing three companies whose stock prices were considered too low, including Alcoa, which ends more than half a century of membership.
The three companies - an investment bank, credit card payment processor and apparel company, respectively - will also replace Bank of America Corp, Hewlett-Packard Co, along with Alcoa in the 30-stock average, the index managers said Tuesday.
The changes will take effect at the opening of trading Sept. 23, said S&P Dow Jones Indices, whose index committee makes decisions on the make-up of the average.
With the changes, the committee again passed on a chance to include Apple Inc and Google Inc, the first- and third-largest U.S. companies by market value. Apple stock trades above $500 and Google closed Monday above $888.
Google and other names were considered for inclusion but passed over in part because of their high stock prices, David Blitzer, managing director and chairman of the S&P Index Committee, told CNBC.
The Dow is still considered Main Street's view of the stock market, even though its methodology - weighting stocks by their price, rather than market value - has kept out the likes of Google or Apple, arguably two of the most important companies in the U.S. economy presently.
Even though S&P Dow Jones Indices classifies Visa Inc as a technology name, adding the nation's largest credit-card processor along with Goldman Sachs Group Inc reflects a further tilt toward financial services.
Nike Inc's addition marks the first inclusion of an apparel maker since International Shoe was replaced in 1933, according to S&P Dow Jones Indices records.
Following the announcement, Visa shares were up 2.7 percent at $183.44, Goldman rose 3.3 percent to $164.70 and Nike added 1.5 percent to $66.37 after earlier hitting $66.98, a record intraday high. The Dow was up 0.6 percent on the day.