Make us your home page
Instagram

Dow gets rid of GM, adds Cisco Systems

NEW YORK — After 84 years as one of the Dow Jones Industrial Average's 30 blue-chip stocks, General Motors Corp. was given the boot Monday by Dow Jones and the editors of the Wall Street Journal after the auto giant filed for bankruptcy.

Dow Jones Indexes said Cisco Systems will replace GM on the Dow, while Citigroup Inc. was also shed, to be replaced by the Travelers Cos. Inc.

The change will be effective June 8. A bankruptcy filing, like nationalization, is grounds for removal from the Dow, said John Prestbo, editor of Dow Jones Indexes. Insurance giant AIG, nationalized as part of a government rescue, was removed from the index in September.

"We stuck with them in the past when they had trouble and then came out of it," Prestbo said in an interview before the removal of GM, a U.S. corporate icon.

GM shares on Monday traded up 12 percent at 85 cents. The New York Stock Exchange said it would suspend trading in the stock before today's opening.

Citigroup's shares rose 0.3 percent to $3.73. Travelers' shares gained 4.1 percent to $42.34. And Cisco shares gained 4.8 percent to $19.38.

Standard & Poor's said GM wouldn't automatically face ejection from the S&P 500 index. Such a move would depend on whether the stock was allowed to continue trading and maintained sufficient liquidity.

But while the S&P 500 is used as a benchmark by investment professionals, it is the Dow average that has long been viewed as the symbol of corporate and investment success in the public eye.

GM's loss of its blue-chip status is therefore also symbolic of the seismic shifts experienced in the U.S. and the global economy in recent times.

GM was first added to the Dow in 1915, only to be removed a year later for reasons known only to Journal editors at the time, who didn't make public how they had reached their decision.

But when GM was reinstated in 1925, there was little doubt why. The auto industry was booming and a big driver of economic growth.

"With $3.5 billion in market value, GM was enormous back then," said Howard Silver­blatt, index analyst at Standard & Poor's. "What was good for GM was good for the country."

Times have changed, however, and although GM had survived the past three decades of ups and downs for the U.S. auto industry, calls for a change in the Dow's makeup had grown louder ahead of the bankruptcy filing.

"The Dow is supposed to represent the economy, yet there was zero Internet exposure in there," said Barry Ritholtz, chief executive and director of equity research at Fusion IQ, ahead of the announcement. Ritholtz had for some time been a strong advocate of adding Cisco's stock to the Dow.

Dow gets rid of GM, adds Cisco Systems 06/01/09 [Last modified: Tuesday, June 2, 2009 4:45pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, MarketWatch.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Tampa Chamber of Commerce announces small business winners

    Business

    TAMPA — The Greater Tampa Chamber of Commerce selected the winners of the 2017 Small Business of the Year Awards at a ceremony Wednesday night at the David A. Straz, Jr. Center for the Performing Arts. More than 600 attendees celebrated the accomplishments of Tampa Bay's small business community.

    Vincent Cassidy, president and CEO of Majesty Title Services, was named Outstanding Small Business Leader of the Year by the Greater Tampa Chamber of Commerce.

  2. International array of artists chosen as finalists for Pier project

    Local Government

    ST. PETERSBURG — A diverse group of six artists will compete for a chance to install their work at the city's multimillion-dollar Pier District, expected to open in early 2019.

  3. Gourmet food fight between top chefs raises $200,000

    News

    ST. PETERSBURG — The chefs came armed with their secret ingredients — pork rinds, truffle butter, pork bellies.

    (From left to right) Chefs Ryan Mitchell, Michael Buttacavoli, Ted Dorsey and Matthew Brennan compete during Tampa Bay Food Fight at The Coliseum in St. Petersburg on Tuesday. The event features chefs from the Tampa Bay area and benefitted Metropolitan Ministries. EVE EDELHEIT   |   Times
  4. HSN star Joy Mangano promotes new book: Inventing Joy

    Retail

    ST. PETERSBURG — After more than 30 years, Joy Mangano knows a thing or two about promoting products. Now she's promoting herself.

    Inventor and entrepreneur Joy Mangano is releasing her first new book, Inventing Joy on Nov. 7. [TIERRA SMITH | Times]
  5. Moffitt CEO Alan List, new chair of Tampa Hillsborough EDC, outlines goals for 2018

    Economic Development

    Moffitt Cancer Center CEO Alan List was officially elected the 2018 chairman of the Tampa Hillsborough Economic Development Corp. at the EDC's annual meeting held Tuesday night at the Amalie Arena. He endorsed a stronger pursuit of life science business for the region and praised ongoing efforts to raise the national …

    Dr. Alan F. List, CEO of Tampa's Moffitt Cancer Center, now wears an economic development hat as the 2018 chairman of the Tampa Hillsborough Economic Development Corp. [Special to the Times]